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Twenty Key Challenges in Environmental and Resource Economics

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• Published: 16 October 2020
• Volume 77 , pages 725–750, ( 2020 )

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• Lucas Bretschger 1 &
• Karen Pittel 2  

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Economic and ecological systems are closely interlinked at a global and a regional level, offering a broad variety of important research topics in environmental and resource economics. The successful identification of key challenges for current and future research supports development of novel theories, empirical applications, and appropriate policy designs. It allows establishing a future-oriented research agenda whose ultimate goal is an efficient, equitable, and sustainable use of natural resources. Based on a normative foundation, the paper aims to identify fundamental topics, current trends, and major research gaps to motivate further development of academic work in the field.

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1 Introduction

1.1 research frontier.

The research agenda in environmental and resource economics has always been very broad and dynamic, reflecting the ways our economies interact with the natural environment. While in classical economics of the eighteenth century the factor land played a dominant role, the effects of pollution externalities, resource scarcities, ecosystem services, and sustainability became important in subsequent time periods. These issues have triggered different waves of research with very prominent results, specifically on optimal policies in the presence of externalities (Pigou 1920 ), optimal extraction of non-renewable resources (Hotelling 1931 ), optimal capital accumulation in the presence of resource scarcities (Dasgupta and Heal 1974 ), and sustainable development (Hartwick 1977 ; Pearce et al. 1994 ). Of course, the list of topics has already been very diverse in the past but has increasingly become so with recent global environmental problems challenging the functioning of a world economy which is growing at a high rate and heavily relies on an international division of labour and trade.

In the past, new research challenges emerged and manifested in different ways: Some topical fields became increasingly relevant due to new technological developments, new ecological or societal challenges or new political agendas. Others arose in fields that were already well researched but rose in importance. Not all challenges were of a topical nature. In some fields, we found our methodological tool-kit not equipped to deal with new problems or in need of extension to find new (and better) answers to old questions. At the same time, it has become increasingly clear that we have to reach out to other disciplines to meet new and often immense challenges. In environmental economics it is key to seek a good balance between disciplinary excellence, interdisciplinary collaboration, and political impact.

Environmental and resource economics is a dynamic field, in which new key topics emerge frequently. So, while the topical and methodological challenges that the paper identifies will be important for some time to come, they will and should also be subject to further development over the next years and decades. The paper aims to identify and address the variety of new complex problems generated by humans when they exploit natural resources and the environment. We specifically identify Twenty Challenges that we feel will be important for environmental and resource economists to address. We are aware that such a list will never be unanimously agreed upon and we do not even lay claim on the list being complete; the next section provides a background to the compilation of the list. Nevertheless, we feel it to be important to (at best) point researchers in directions important to work in in the future or (at least) to launch a new—controversial but productive—discussion on the development of our field. In any case, the paper should support the profession to operate at the research frontier generating novel theories, empirical designs, and workable policies. But, before we turn to the Twenty Challenges , we aim to motivate the framing of research in our field—past, present and future.

1.2 Identification of Research Challenges

To provide a normative foundation for our research agenda we characterize our underlying assumptions and generalized views on the nature of research in the field. This set of basic assumptions motivates the criteria of importance, activeness, and distinction of the selected topics as well as our choices with respect to design, methodology and research methods. Identifying the relevant issues, i.e. the mere choice of what to study in environmental economics imposes specific values on the subjects. In our view, the guiding principle in the normative framework is that environmental economics differs from general economics by its ontology, i.e. the system of belief that reflects the interpretation of what constitutes an important fact. It is a deep and serious concern about the state of the natural environment that drives the economic analysis of ecological processes. Nature is not simply part of the economic system but a different system with its own very complex regularities and dynamics; ecosystem values are not reducible to market exchange values. The task to integrate the ecological and economic systems to a holistic framework in an appropriate manner and to derive valid guidelines for the economy under the restrictions imposed by the environment lies at the heart of our research. Central parts of the ontology are the valuation of ecosystems, the increasing scarcities in natural resources and sinks, the effects of environmental externalities, the long-term orientation of planning, an important role of uncertainty, and the existence of irreversible processes. The anthropocentric view and the use of utilitarianism do not imply that individuals are purely self-centered and narrowly selfish. It highlights the indistinguishable role of human decision making for the future of the planet and aims at decision making that cares for efficiency, equity, and posterity. Based on a broad utilitarian setup, growth is not valued in terms of material consumption but in terms of wellbeing, which includes elements like social preferences, work-life balance, appreciation of nature etc. Posterity reflects our care for future generations, whose welfare should not be harmed by the activities of current generations. Fundamental changes of the economy e.g. the phase-out of fossil fuels, includes policy-induced decrease of activities, a role for technology, substitutability in production and consumption, a decoupling from natural resource use, and internalizing cost to correct market failures. Substantive transitions are very difficult to implement, as important lock-in mechanisms such as habit persistence, built infrastructure, and supporting policies such as subsidies stabilize current practices. To achieve a change of mindset in politics to achieve a transition to a green economy is a difficult task. A fundamental systems change, as discussed by many these days, is undoubtedly much more complex to accomplish; its impacts are uncertain and may delay the necessary steps which are important to rapidly improve the state of our ecosystems.

We acknowledge that one can always challenge an ontological position because it reflects ethical principles. In our research agenda there is no external reality, independent of what we may think or understand it to be. We reduce economic and ecological complexity through our personal system of belief to design our preferred map, which by definition is not the territory. In his survey of ecological research issues for the economists, Ehrlich ( 2008 ) refers to his ”own mental meta-analysis” to motivate his choices and to alert us to the importance of research on big issues like the meaning of life, mortality, and death. At the same time, he acknowledges that the emergence of pervasive new environmental problems, such as climate change and biodiversity loss, requires to flexibly adjust research programs to societal demand. Adjustments of the agenda may also be supply driven, when new methods allow for more effective engagement with important issues like risk and uncertainty or assessment of empirical regularities with superior estimation methods.

1.3 Forming a Research Agenda

Environmental economics is closely linked to general economics in its epistemology, i.e. the validity, scope and methods of acquiring knowledge by using models, distinguishing between positive and normative models, and testing hypotheses with empirical methods and experiments. An important cornerstone for economic research has always been the analysis of economic efficiency. Since the early days of environmental economics research, this has also held for our field whether it concerned the efficiency in the use of natural resources or the design of policies. Although research in our field has become much more interdisciplinary and policy-oriented, this still constitutes common ground. It is still a prime duty of the economist to point at the potentially vast allocative inefficiencies of the use of natural resources in pure market economies. Efficiency is a necessary condition for optimal states of the economic-ecological system and the foundation for policies maximizing social welfare.

The pursuit of optimality has to be complemented by a requirement to take care of equity and posterity enabling sustainability of development. In this long-run perspective, economics has to highlight the substitution effect as a powerful mechanism establishing consistency between humanity and its natural environment. Substitution comes in many guises, e.g. as substitution between clean and dirty production, renewable and exhaustible resources, extractive and conservationist attitude, pollution intensive and extensive consumption, etc. This dynamic analysis is crucial in many respects. It has recently been included at all levels of research in the fields. The same holds for the issue of risk and uncertainty, a pervasive topic when dealing with the environment.

In many cases, there has been a significant discrepancy between the theoretical derivation of social optima in academia and the attempts to foster their implementation under realistic policy conditions. As a consequence, policies dealing with environmental issues have been of very different quality and effectiveness. The reduction of acid rains, the protection of the ozone layer, and cutbacks of particulate matter emissions in many world regions were among the prominent successes. Global warming, extraction of rare earth elements, and loss of biodiversity are not yet addressed in a comprehensive manner. Political resistance against the protection of nature often refers to the economic costs of policies, including the concerns of growth reduction, employment loss, and adverse effect on income distribution. The lack of success in many policy areas has led to reformulation and extension of the research agenda. In the future, research should focus more on strengthening the links between theory and policy.

Our selection of the Twenty Challenges is also based on the potential of research in these areas to contribute and leverage social welfare and sustainable development. We specifically look for areas that are either inherently new to the research agenda in environmental and resource economics or in which research stagnates. We present the challenges in a specific order and like to highlight the links between them before we enter into the details. The aim of net zero carbon emission by the mid of the century dominates current policy debates and unites basically all important elements of our discipline; it thus constitutes a good starting point. Decarbonization necessarily involves a deep understanding of systems dynamics and of risk and resilience, which are presented next. An important and not sufficiently addressed research issue is the emergence of disruptive development during a substantive transition, the next challenge for our research. Extending the scope, we then address human and government behaviour. In the context of environmental policy, the popular and sometimes underrated request of an equitable use of the environment has emerged as a dominant topic, a next issue for further research. As natural capital involves many more elements than the climate, biodiversity and general ecosystem services are included in the sequence. Broadening the scope to the big problems of human behaviour with natural resources we then turn to political conflicts, population development and conflicting land use. Shifting the focus on induced movements of the labour force we go on by dealing with environmental migration and urbanization. These affect welfare of the individuals in a major way, like health and the epidemiological environment as a next research challenge. In terms of the reorganization of the transition to a green economy we highlight the central role of finance and the implementation of new measures in the dominant energy sector. The final three research challenges are motivated by advances in the methodology. Big data and machine learning offer new perspectives in sustainability research, refined methods and increasing experience improve our simulation models and structural assessment modelling, which forms the last three challenges of our list.

1.4 Links to Current Research

In order to put our agenda into a broader perspective and to concretize the selected challenges, we believe it is important to show the relationship between our research agenda and the priorities in current literature and policy debates. We have considered three main links. First, we conducted a quantitative and qualitative literature review and analyzed current research as presented at international conferences (World Conference of Environmental and Resource Economics in 2018, the SURED conference in 2018, Meetings of the American, European, and Asian Associations of Environmental and Resource Economics in 2019). The aim of this analysis was to see where our profession moves and which of the currently hotly debated topics offers a high potential for future research. Second, we took the discussions in interdisciplinary research fora into consideration to identify further fields that are of high importance for future resource use, sustainable development and environmental outcomes but have so far not been adequately addressed from an economics perspective. Information on this research was gained through interdisciplinary research initiatives (for example The Belmont Forum, Future Earth and National Research Funding Activities). Involvement in interdisciplinary and globally oriented research councils provided further access to the discussions in other disciplines. Third, we draw conclusions from current policies and news as well as our involvement in the policy arena. The authors are involved in a number of institutionalized policy-oriented activities on the regional, national and international level (Regional Climate Councils, National Climate Policy Platforms as well as the UN climate negotiations).

The paper relates to similar contributions in recent literature. Based on citation data Auffhammer ( 2009 ) identifies important topics and scholars and provides a brief historical overview of the discipline from exhaustible and renewable resources to sustainability, pollution control, development, international trade, climate change, international agreements, and non-market valuation. Polyakov et al. ( 2018 ) analyze authorship patterns using text analysis for classification of articles in Environmental and Resource Economics. Based on 1630 articles published in the Journal from 1991 to 2015 they document the importance of applied and policy-oriented content in the field. They identify non-market valuation, recreation and amenity, and conservation, as popular topics and growing when measured by both number of articles and citations. Costanza et al. ( 2016 ) investigate the most influential publications of Ecological Economics in terms of citation counts both within the journal itself and elsewhere. Important topics turn out to be social aspects of environmental economics and policy, valuation of environmental policy, governance, technical change, happiness and poverty, and ecosystem services. A contemporary analysis of how research issues have developed in the Journal of Environmental Economics and Management in the time of its existence is provided by Kubea et al. ( 2018 ). These authors show that the sample of topics has broadened from the core issues of non-market valuation, cost-benefit analysis, natural resource economics, and environmental policy instruments to a more diversified array of research areas, with climate change and energy issues finding their way into the journal. In addition, increasing methodological plurality becomes apparent. They conclude that energy, development, and health are on the rise and that natural resources, instrument choice, and non-market valuation will endure; multidisciplinary work will be increasingly important. An excellent survey on research in the central field of sustainable development is provided in Polasky et al. ( 2019 ), which explicitly shows where the collaboration between economists and the other disciplines is currently insufficient and how it should be intensified in the future.

Regarding the literature that we connect our Twenty Challenges to, we naturally face the problem that some challenges have so far not been addressed adequately in the (economics) literature. In these cases we also reference papers from other disciplines. We, however, also take basic literature and recent research in environmental and resource economics into account. As we often deal with emerging topics, we cite some of this work even when not yet published. In other cases, where future research can build on or learn from past research, we also go back in time and reference older papers. Ultimately, neither our list of challenges nor the literature we base our analysis on will be satisfying to everybody. Our selection cannot be comprehensive and does not claim to be. But the specific task to identify future-oriented topics ultimately lasts on a subjective individual assessment of the authors. Nevertheless, hopefully it imparts impulses for future research in the different subfields of environmental and resource economics.

2 Twenty Challenges

The ordering of the following challenges should not be understood to perfectly reflect their individual importance (beyond what we explained in the previous sections). Also, many of the fields discussed are inherently related, creating some unavoidable overlap. We feel that efforts to bring the challenges into some complete ’natural order’ are not only doomed to fail but also would not do them justice as they relate to very different areas and can/should not be weighed against each other. Also, attempting to show their interrelations would result in a 20-by-20 matrix that would not provide more clarity.

Deep decarbonization and climate neutrality To limit global warming to a maximum of 1.5 degrees Celsius, a state of net zero greenhouse gas emissions—i.e. climate neutrality—should be reached by the mid of the century (IPCC 2018 ). The directly following and unprecedented challenge is to decarbonize the global economy in very a narrow time window (Hainsch et al. 2018 ). This holds especially as the threshold for 1.5 degrees is expected to be passed around 2040 (IPCC 2018 ). Countries must increase their NDC ambitions of the Paris Agreement more than fivefold to achieve the 1.5 degree goal (UN - United Nations 2019 ). The time window for necessary decisions is closing fast. Infrastructure that is installed today often has a life span that reaches until and beyond 2050. Decisions on investments today therefore affect the ability to reach climate targets not only in 2030 but also 2050 and beyond. And while the necessity of reaching net zero emissions by mid century is reflected by, e.g., the European Commission’ Green Deal, much uncertainty remains regarding its implementation. This holds to an even larger extent with respect to other countries and regions. The fundamental challenge is to better understand economically viable deep decarbonization paths and then to implement incentives for input substitution, technology development, and structural change. More specifically, the vision of these policies has to be long-term and reach beyond phasing out coal and increasing energy efficiency. However, despite recent research efforts in climate economics, many issues around decarbonization, negative emissions and economic development are still controversial or insufficiently understood by economists. Specifically, industry applications for which alternative technologies are not available yet as well as agricultural emissions will have to be addressed. Also, the later greenhouse gas emissions start to fall, the faster their decline will have to ultimately be in order not to overshoot temperature targets (Agliardi and Xepapadeas 2018 ), leading to an increased need for negative emissions. However, potential trade-offs and synergies in the use of land for negative emission technologies, food production and biodiversity are still underresearched. Identifying technologies today that are the most promising in the very long run is subject to high uncertainty. Yet, while investing too early might be costly, delaying investment might cost even more or might lead to a weakening of future climate targets (Gerlagh and Michielsen 2015 ). Also, transition processes may involve strong scale effects implying nonlinear development of abatement cost. Once certain thresholds are reached, lower abatement cost or even disruptive development completely altering the production process could emerge in a later phase of decarbonization. Given the dramatic increase needed in mitigation efforts to reach the 1.5 or even 2 degree target, more attention also has to be devoted to the question of adaptation. Until today, the focus of research as well as policy has been primarily on mitigation rather than adaptation, partially because of expected substitution effects between mitigation and adaptation and partially because adaptation was taken to be automatic (Fankhauser 2017 ). However, as Fankhauser lays out “knowledge gaps, behavioral barriers, and market failures that hold back effective adaptation and require policy intervention”. All of these topics present a wide scope for substantial further research.

Dynamics of the economic-ecological system Depletion of exhaustible resources, harvesting of renewable resources, recycling of raw materials, and accumulation of pollution stocks require basic societal decisions which are of an inherently dynamic nature. Whether the world society will be able to enjoy constant or increasing living standards under such dynamic natural constraints depends on another dynamic process, which is the accumulation of man-made capital. To derive the precise laws of motion in all the stock variables is challenging because general solutions of dynamic systems with several states are usually hard to obtain. An adequate procedure to obtain closed-form solutions may be to link several stocks in a reasonable way, e.g. when simultaneously dealing with resource, pollution, and capital stocks (Peretto 2017 ; Bretschger 2017b ). The specific challenge is then to find the best possible economic justification to motivate the links. One may also focus on a few stocks which are considered the main drivers of economic development and sustainable growth on a global scale (Marin and Vona 2019 ; Borissov et al. 2019 ). When resorting to numerical simulation methods it is a main challenge to provide basic economic results which are sufficiently robust and supported by ample economic intuition. Social-ecological systems are increasingly understood as complex adaptive systems. Essential features of these systems - such as nonlinear feedbacks, strategic interactions, individual and spatial heterogeneity, and varying time scales—pose another set of substantial challenges for modeling in a dynamic framework. A main challenge is the characterization and selection of dynamic paths with multiple equilibria and the overall tractablility of the models, given the diversity of interlinkages and nonlinear relationships. The complexity of economic-ecological systems lead to a main challenge for designing effective policies is taking account of network effects, strategic interaction, sectoral change, path dependencies, varying time lags, and nonlinear feedbacks have to be considered as well as different regional and temporal scales, interdependencies between ecosystems, institutional restrictions and distributional implications (see, e.g., Engel et al. 2008 ; Levin et al. 2013 ; Vatn 2010 ). Optimal policies should also acknowledge the balance between the preservation of the ecology and the development of the economy especially for countries growing out of poverty. Setting a price for ecosystem services and natural capital via policy is important for preventing innovation incentives from being skewed against maintaining natural capital and ecosystem services.

Risk, uncertainty, and resilience The vast majority of contributions in environmental economics use models with a purely deterministic structure. However, large negative environmental events require a completely different framework, which poses specific challenges for modelling. Heatwaves, floods, droughts, and hurricanes are shocks that are very uncertain, arriving at irregular times and with varying intensity. Also, risk and uncertainty about socio-economic impacts and technological development affect the optimal design of policies (see, e.g., Jensen and Traeger 2014 ). Moreover, uncertainty changes the political economy of climate policy and, finally, regulatory and policy uncertainty might create obstacles to reach climate targets through, for example, distortions of investment decisions (Pommeret and Schubert 2018 ; Bretschger and Soretz 2018 ). Stern ( 2016 ) argued forcefully that climate economics research needs to better integrate risk and uncertainty. Bigger disasters or so-called ”tipping points” such as the melting of the Greenland ice sheet, the collapse of Atlantic thermohaline circulation, and the dieback of Amazon rainforest involve an even higher level of uncertainty (Lenton and Ciscar 2013 ) with implications for optimal policy design and capital accumulation (Van der Ploeg and de Zeeuw 2018 ). Understanding the implications of tipping points is further complicated as the different tipping points are not independent of each other (Cai et al. 2016 ). The Economy and the Earth system both form non-deterministic systems; combining the two in an overarching framework and adding institutions for decision making multiplies the degree of complexity for adequate modelling and methods (Athanassoglou and Xepapadeas 2012 ). It is thus a main challenge for further research to provide analytic foundations and policy rules for rational societal decision-making under the conditions of risk and uncertainty up to deep uncertainty (Brock and Xepapadeas 1903 ; Baumgärtner and Engler 2018 ). Future work on policy design under deep uncertainty can build on a wide range of literature ranging from the assessment of the precautionary principle in this context to the fundamental contributions by Hansen and Sargent ( 2001 ) and Klibanoff et al. ( 2005 ) as well as on more recent analyses in the context of environmental and resource economics, e.g. Manoussi et al. ( 2018 ). An important challenge of the environmental discipline is to provide a framework for the global economy providing the conditions for resilience against major shocks and negative environmental events (Bretschger and Vinogradova 2018 ). With deep uncertainty one has to generate rules for deep resilience. Including uncertainty is especially important when environmental events do not occur constantly but cause the crossing of tipping points involving large and sudden shifts. Economic modeling needs to increasingly incorporate tipping points and the value of resilience in theory and to generate and use data supporting the empirical validity. The combination of uncertainty and potential irreversible outcomes (e.g., species extinction) is another big challenge for research.

Disruptive development and path dependencies Substantial and sometimes disruptive changes in behavioral patterns, economic structure and technologies will be required if net zero GHG emissions and the UN sustainable development goals are to be reached. On the bright side, development may exhibit favorable disruptions. Consumers’ preferences and political pressure coupled with new technology achievements may alter certain sectors in a short period of time. Similar to the communication industry which has completely changed, transportation and heat generation could and mst probably will undergo fundamental changes in the near future. The research challenge here is to provide adequate models predicting and adequately analyzing such important transitions and to highlight resisting forces at the same time. In fact, the change of trajectories in development is often hampered by technological, economic and behavioral lock-ins, resulting in path dependencies and inertia. In such situations, history influences current development through, for example, past investment in R&D, the size of established markets, increasing returns or habits acquired (Aghion et al. 2016 ; Barnes et al. 2004 ; Arthur 1989 ). Behavioral path dependencies affect acceptance and adoption of new technologies, hinder social innovation and might render policies aimed at marginal changes ineffective. They can thus postpone the transition to a low-carbon economy, harm efforts in biodiversity conservation and prolong unsustainable resource use patterns and lifestyles, even if they are welfare enhancing in the long-run (e.g. Acemoglu et al. 2012 ; Kalkuhl et al. 2012 ). Inertia and lock-ins may also be policy driven with, for example, political or economics elites trying to block change (Acemoglu and Robinson 2006 ) or clean energy support schemes fostering new technology lock-ins. Whether disruption or a lock-in emerges depends, for example, on expectations determining the steady state of an economy (Bretschger and Schaefer 2017 ). This requires nonlinearities e.g. in capital return, generating overlap regions in which the growth path is indeterminate and could be either driven by history or by expectations. The challenge is to add more substantial research into system dynamics and the political economy of change, to gain a better understanding of the different mechanisms responsible for inertia and disruptive change. So far, the role of path dependencies has often been neglected in empirical as well as theoretical analyses (Calel and Dechezlepretre 2016 ). Also, understanding the triggers or tipping points for disruptive change can help to identify policies that have a big environmental impact with moderate costs in terms of environmental policy.

Behavioral environmental economics Traditionally, economics focuses predominantly on the supply side when analyzing potentials and challenges for environmental policies. Preferences of individuals are mostly assumed to be given with economic analysis confining itself to studying the effects of changing incentives and altering constraints. The change and development of preferences over time plays only a comparative minor role for economic research. Also, the follow-up question whether policies should be allowed to tamper with preferences is rarely discussed with nudging being one big exception to this rule (e.g. Strassheim and Beck 2019 ). While the traditional, supply-side oriented analysis has provided powerful results in positive analysis, it proves to be limited in a field which inherently includes normative conclusions like environmental economics. The path toward sustainable development requires behavioral changes and political actions changing our relationship to the environment. Ultimately, environmental policies have to be decided by the same people overusing the environment in the absence of a policy. In situations where outcomes are inefficient because individuals and political actors follow their own self-interest and ignore external costs and benefits of their actions, it is clearly not sufficient for economists to advocate the implementation of environmental policies. It is crucial to understand under what conditions preferences change and agents support green policies (Casari and Luini 2009 ). So, the challenge to economic research is to better understand the evolution of green attitudes, the emergence of preferences for a clean environment, and expectations in the case of multiple equilibria (Cerda Planas 2018 ). The formation and development of preferences is also not independent from cultural, regional and community aspects. Research that ignores heterogeneity among actors or the role of social and group dynamics and only relies on the traditional, isolated analysis of individual preferences is likely to lead to an incomplete understanding of preference dynamics. As the example of discounting shows, the social context has an impact on myopic attitudes and the motivation to undertake sacrifices for a cleaner future (Galor and Özak 2016 ). Also, attention to behavioral details, that economists might find rather uninteresting from a research perspective, might influence effectiveness of policies tremendously (Duflo 2017 ). Especially with the natural environment, the choice and guise of policy instruments should take these mechanisms into account.

Institutional analysis of environmental policy Virtually every contribution to the environmental and resource economics literature culminates in one or several policy conclusions. However, these results are often received with skepticism from industry and public. Therefore, a continuing key challenge for our profession is a thorough understanding of environmental policy institutions, processes and decision-making; this task has become even more important given the enormous scale and global nature of future policies. Research in this area has, however, the advantage of already looking back on a long tradition (see e.g. the body of work by Daniel Bromley, e.g. Bromley 1989 ). Well-designed institutions support and create incentives to drive development toward a welfare-improving state. Absent, weak, inefficient, or even corrupt governments and institutions are detrimental to successful environmental policy (Pellegrini and Gerlagh 2008 ; Dasgupta and De Cian 2016 ) or might lead to detrimental effects of resource wealth (see Badeeb et al. 2017 for an overview of the related literature). To effectively increase social welfare by, for example, conservation of ecological services, one has to design policies in a way that allow implementation under realistic policy conditions (Rodrik 2008 ). Pure reference to the construct of a social planner is not sufficient. For increasing efficiency in problem solving, the ex-post evaluation of policies has to be expanded and improved. Policy evaluation should not only analyze if regulatory objectives have been reached but also which side-effects arise (OECD 2017 ). Moreover, the comparison with alternative measures and a continuous international exchange of best practices have to be supported by science. A proactive environmental policy analysis should furthermore include studying vested interests, lobbying, political power, policy communication, and voting behavior. Especially insights from behavioral economics may add to our understanding of a proper design of environmental institutions. On the international level, the adequate institutional design for global environmental policy still poses great challenges. Beyond traditional research fields like international environmental agreements in specific areas like climate change, the multi-dimensionality of the sustainable development goals (SDGs) and potential trade-offs between different goals need to be explored further. This holds especially given the vast differences in income, vulnerability, and resilience between countries, as well as the need for unanimity and voluntary contributions on the UN level. Relating national to international policies has the potential to be especially rewarding in this context given the SDGs relevance for and acceptance in national as well as international politics. Insights from the analysis of institutions in traditional economic sectors (e.g. on the efficiency of capital markets) should be transferred and applied to the global level (e.g. with respect to investment in the world’s natural capital stock).

Equitable use of the environment We place equity and fairness in dealing with the natural environment on the priority list of our challenges because first and foremost equity is a central requirement for sustainability of development. By definition, sustainable development seeks an equitable treatment across different generations as well as agents living today. We also believe that for successful environmental policies, equity and fairness are crucial complements to the dominant efficiency requirement (Sterner 2011 ). It is a specific challenge of our field to study equity in an economic context and to demonstrate its importance for sustainability to mainstream economics and the public. The first aspect of the problem is the aforementioned unequal vulnerability of countries to environmental changes such as global warming. If vulnerability is higher in less developed countries, the equity perspective is especially striking. As a matter of fact, most of the climate vulnerable countries have a low average income. Global environmental policy is then motivated not only by efficiency but also by the aim of preventing increasing inequalities (Bretschger 2017a ). Global efforts are also indicated to avoid adverse feedback effects of induced inequalities like environmental migration. The second aspect is that acceptance of public policies sharply increases with the perceived fairness of the measure (Pittel and Rübbelke 2011 ; IPCC 2018 ). In the past, economists have often underestimated political resistance against efficient environmental protection, which was mostly related to negative impacts on income distribution. Take carbon pricing and emission regulation as a current example. Although evidence from cross-country studies suggests that regressivity of carbon pricing is much less frequent than often assumed in the public (Parry 2015 ), the perceived distributional impact is often very different (Beck et al. 2016 ). Therefore the impact of environmental policies on income groups, regions, and countries should be better integrated in our analysis and policy recommendations. Where efficient policies are regressive, economists have to evaluate and propose alternative or complementary policy designs. Benefits and costs need to be disaggregated by group (country) with a special attention on the poorest members of society (countries). Internationally, equity concerns need to be addressed especially in situations where the entire world benefits from the protection of natural capital and ecosystem services in poor countries (e.g., of carbon sinks and biodiversity hubs like tropical rain forests). The experience with the REDD+ process shows the complexity of designing such international approaches to incentivize and enable developing countries to protect these global public goods. More economic analysis is needed on all of the above aspects, giving rise to a rich research agenda in theory and applied work.

Loss of biodiversity and natural capital The rate of species extinction today is estimated to be up to 1000 times higher than without human interference (Rockstrom 2009 ). Human activities impact biodiversity through land use change, pollution, habit fragmentation and the introduction of non-native species but also increasingly through climate change and its interaction with already existing drivers of biodiversity change (IPCC 2002 ). In view of this, biodiversity conservation has long been a focus of politics. In 1992, the United Nations Convention on Biological Diversity main objectives were stated as ”the conservation of biological diversity, the sustainable use of its components and the fair and equitable sharing of the benefits arising out of the utilization of genetic resources” (UN - United Nations 1992 ). Yet, although economists have developed conceptual and theoretical frameworks addressing the valuation of biodiversity (Weitzman 1998 ; Brock and Xepapadeas 2003 ) and despite data on valuation having become increasingly available (see, e.g. TEEB 2020 ), Weitzman ( 2014 ) points out, that an objective or even widely agreed measure of biodiversity and its value is still missing. The same holds for an underlying theory framework and a comprehensive measure of natural capital that not only includes biodiversity but also its links to regulating services (e.g., pollution abatement, land protection), material provisioning services (e.g., food, energy, materials), and nonmaterial services (e.g., aesthetics, experience, learning, physical and mental health, recreation). How biodiversity and natural capital should be measured, which societal, political and economic values underlie different measures and valuation and how ecological and economical trade-offs should be dealt with are big challenges left for future research. In order to address these issues, not only do we need to develop appropriate assessment methods, but we also need to disclose the theoretical basics of this assessment and which trade-offs go hand in hand with different assessments (Brei et al. 2020 ; Antoci et al. 2019 ; Drupp 2018 ). Completely new issues for the valuation of biodiversity and natural capital arise with the development of new technologies. Take DSI (digital sequence information), for example. DSI are digital images of genetic resources (DNA) that can be stored in databases. This gives rise not only to new challenges regarding their valuation but also about the fair and equitable sharing of the benefits arising out of the utilization of these resources.

Valuing and paying for ecosystem services Related to the question of biodiversity valuation is the market and non-market valuation of ecosystem services in general and the adequate design of payment for ecosystem services (PES). Overall, research on ecosystem services valuation has made significant progress in the last decades. Nevertheless, challenges remain even in traditional valuation fields (for example, valuation of non-use or interconnected ecosystems). Other, so far underresearched areas that constitute promising fields for future research are health-related valuation aspects (Bratman et al. 2019 ) and nonmaterial ecosystem services, such as amenities of landscapes or cultural ecosystem services (Small et al. 2017 ; James 2015 ). Also, data availability remains a problem in many valuation areas. Although digitized observation and information systems offer large potentials for previously unknown data access, they also raise a whole slew of new ethical, privacy as well as economic questions, especially in areas like health. While a lot of progress has been made in the valuation of ecosystem services, their impact on decision making still lags behind. One factor contributing to this disconnect are prevalent mismatches between regional and temporal scales of economic, institutional and ecological systems that make valuation and policy design complex (Schirpke et al. 2019 ). The challenge is to develop combined natural science-economic models that allow better insights into how changes in economic systems lead to changes in the flows of ecosystem services and vice versa (Verburg et al. 2016 ). This requires a deep understanding of ecological and economic systems as well as other aspects like technologies, regional heterogeneity and system boundaries, i.e. catastrophic events. It also raises classic economic problems, such as choosing an appropriate discount rate and degree of risk aversion. Regarding tools to include ecosystem services in economic decision making, PES are a, by now, well-established (Salzman et al. 2018 ) and also quite well-researched approach for promoting environmental outcomes. Still, the literature has identified a number of aspects to be addressed in the design of PES to make them more effective as well as efficient and to simultaneously improve social outcomes (Wunder et al. 2018 ; Chan et al. 2017 ). A promising area of research rarely addressed are PES to preserve transboundary or global ecosystem services through international payment schemes (for example, in tropical forest preservation). While some work has been done on the conceptual level (e.g. Harstad 2012 ), the REDD+ process (Maniatis et al. 2019 ) and the failure of the Yasuni initiative (Sovacool and Scarpaci 2016 ) show the complexity of such approaches for which a thorough economics analysis is still missing.

Conflicts over natural resources Climate change and decarbonization transform regional and global geopolitical landscapes and might give rise to future domestic as well as international conflicts (Mach et al. 2019 ; Carleton and Hsiang 2016 ). First, decarbonization changes the role of resources and of resource- and energy-related infrastructures. Climate policies affect the rent allocation between different fossil fuels like, for example, coal and natural gas, but might also change the overall rent level (Kalkuhl and Brecha 2013 ). Asset stranding can endanger stability in resource (rent) dependent countries. Conflicts may also arise over materials critical to new, low-carbon energy technologies like rare earth elements but also over access to sustainable energy (Goldthau et al. 2019 ; O’Sullivan et al. 2017 ). Further research is needed to design policies that are better equipped to reduce the vulnerability of economies to changes in resource availability and resource rents. This opens up challenges for future research, especially as restrictions from very diverse institutional capacities have to be considered to render policies efficient and effective. Second, climate change will affect the ability to meet basic human needs through food, land and water. Sulemanaa et al. ( 2019 ) find a positive effect of the occurrence of temperature extremes on conflict incidence. They stress the need for more advanced spatial econometric models to identify effects that are transmitted across space. More research is also needed on the role of institutions and interaction with other phenomena like population dynamics, migration, and environmental degradation. Currently, the role of climate for conflict is still small compared to other causes, many linkages between conflicts and climate change as well as other factors promoting conflict are still uncertain (Mach et al. 2019 ). The challenge to economic research is to get early insights into the nexus of historical and cultural factors, vested interests, population dynamics and climate change in order to help to prevent resource-related conflicts.

Population development and use of the environment Already since antiquity, demographic analysis has been a central topic of human thinking. With the Malthusian predictions of catastrophes caused by population growth, the topic is firmly related to the natural environment and the limits of planet Earth. While limited food production was the dominant topic in the 18th century, the impact of world population on global commons, availability of renewable and exhaustible resources, and ecosystem services have been dominant topics in the last decades. Still, while it is often argued in the public and in natural sciences that world population size should be a concern because of ecological constraints, economics has largely left the topic on the side; the few exceptions (Peretto and Valente 2015 ) and (Bretschger 2013 , 2020 ) point in a different direction, namely the compatibility of population growth and sustainable development under very general conditions. Current trends of demographic transition show significant signs of population degrowth for leading economies while trends for developing countries vary substantially (UN - United Nations 2019 ). Population is forecasted to expand especially in Africa, accounting for more than half of the world’s population growth over the coming decades, raising questions about the effect of this population increase on fragile ecosystems, resource use and ultimately the potential for sustainable growth (African Development Bank 2015 ). Population growth will also promote further urbanization and migration triggered by environmental and resource depletion but also giving rise to new environmental problems (Awumbila 2017 ). Challenges from population development and environment are thus closely linked to the other research topics highlighted in this article. However, population growth is not exogenously given but determined by economic, social as well as environmental factors. Education and income or economic development have long been established as crucial for fertility (see e.g. the reviews of the literature provided by Kan and Lee 2018 ; Fox et al. 2019 ). To integrate these findings into a holistic approach is a mediating challenge for future research. Climate change might affect these channels in different ways, potentially exacerbating global inequality (Casey et al. 2019 ). However, population development, fertility, and mortality are not only affected by climate change but also by other environmental stresses like air pollution (Conforti et al. 2018 ). A successful combination of endogenous fertility and mortality with natural resource scarcity, agricultural production, and pollution accumulation as well as capital and knowledge build-up in a comprehensive framework is a respectable challenge for an economic modeller; we suggest that in the future it should be considered by economists more intensively.

Land use and soil degradation The terrestrial biosphere with its products, functions and ecosystem services is the foundation of human existence, not only for food security but far beyond. Currently, about a quarter of ice-free land area is degraded by human impacts (IPCC 2019 ). The optimal use of scarce land resources becomes an even more urgent topic in the face of the biodiversity crisis and the onset of climate change. This holds especially as the physical and economic access to sufficient, safe and nutritious food is the basic precondition for human existence. Climate change challenges this access on different levels. On the one hand, climate change increases the pressure on productive land areas (due to extreme weather events such as droughts, floods, forest fires or the shifting of climatic zones). On the other hand, land plays a major role in many climate protection scenarios by reducing emissions from land use and land use change, protecting carbon stocks in soils and ecosystems, and conserving and expanding natural carbon sinks. Also, the capture and storage of CO 2 through carbon dioxide removal technologies plays an increasing role for reaching the Paris climate goals (IPCC 2018 ). The induced increase in the demand for the different services from land inevitably implies trade-offs. However, neither the trade-offs nor the potentials for synergic uses are, as of now, comprehensively understood from an economic point of view and thus pose a challenge for future research. While there is a growing literature on negative emission technologies, their costs, potentials and side effects (Fuss et al. 2019 and references within) as well as on the interaction between climate goals and other SGDs on the global level (von Stechow et al. 2016 ), many research questions still remain to be addressed (Minx et al. 2018 ). This concerns especially a better understanding of opportunity costs, governance requirements, regional and distributional effects as well as of acceptance and ethical considerations. With respect to land degradation and land use for food production, changing climate and weather conditions as well as regional population pressure may raise the rate of land degradation (Fezzi and Bateman 2015 ), hurting food security and calling for preservation policies (Brausmann and Bretschger 2018 ). The overuse of ecosystems like forests and water, which protect and complement land, can accelerate the risk of adverse shocks and thus lower soil fertility, which reveals the close link between the different research subjects. However, much of the agricultural research in this field is still quite distant from mainstream environmental economics which can harm research productivity substantially. It remains a challenge to integrate agricultural and environmental research better, for example by bringing together food production, population, and the environment into a macrodynamic framework (Lanz et al. 2017 ).

Environmental migration Migration in times of climate change is an extraordinarily complex, multicausal and controversial challenge (Adger et al. 2014 ). Heatwaves, droughts, hurricanes, and rising sea levels are likely to motivate or even force a growing number of people to leave their homes moving to presumably safer places. Climate-related migration can take a variety of different forms (Warner 2011) from voluntary to involuntary, from short- to long-distance and from temporary to permanent. Migration decisions are usually based on different motives and personal circumstances (climatically, politically, economically, socially), leading to heterogeneous reactions to climate events and making it often problematic to identify and delineate climate-induced migration. Due to these and other methodological difficulties and the small number of studies so far, no globally reliable forecasts for climate induced migration exist (WBGU - German Advisory Council on Global Change 2018a , b ). At present, the forecasted magnitude of the phenomenon ranges from 25 million up to 1 billion people by 2050 (Ionesco et al. 2017 ). Much of this migration can be expected to take place within countries, for example, from rural to urban areas or from drylands to coastal zones (Henderson et al. 2014 ) with environmental migration being one possible adaptation and survivor strategy in the face of climate change (Millock 2015 ). Given the uncertainty in future migration projections, the challenge is to improve migration models (Cattaneo et al. 2019 ) which includes a better understanding and integration of the microfoundation of agents’ migration decisions. Migration, and especially mass-migration, can have a profound impact on the environment of the new as well as the old settlement location and on their economic structure. Labor and commodities markets will be affected the most, with challenges arising also for education and health systems, government budgets and public spending. By affecting public institutions and the skill-mix of the labor force, migration alters economic development both in the sending and in the receiving countries or regions. More research is needed on these impacts. The influx of environmental migrants to new settlement locations may also trigger hostile attitudes and lead to clashes and even armed conflicts. The migrants may be perceived as rivals for scarce resources (land, clean water) or jobs. The situation may be aggravated by lack of political stability and poor-quality political institutions. Dealing with these aspects gives rise to new challenges in environment and resource economics. Traditional analysis of economic costs and benefits of migration have to be complemented by behavioral economic and political economy analyses.

Urbanization as a key for environmental development In the last 70 years, the urban population has increased fivefold with more than half of the world’s population living in cities today and forecasts projecting the share of urban population to rise to almost 70% in 2050 (UN - United Nations 2018 ). Cities are responsible for about 70% of the world energy use and global CO \(_{2}\) -emissions (Seto et al. 2014 ) and ecological footprints are positively correlated to the degree of urbanization (WBGU - German Advisory Council on Global Change 2016 ). In 2014, about 880 million people were living in slums (UN - United Nations 2016 ) elucidating the problems to make urban development environmentally as well as economically and socially sustainable. The speed of urbanization is projected to be the fastest in low and middle income countries, especially in Africa and Asia (UN - United Nations 2018 ), leading to new challenges for the provision of infrastructure, housing, energy supply, transport and even health care. Climate change can be expected to not only foster urbanization trends (Henderson et al. 2017 ) but also increase the magnitude of urbanization-related challenges. Urban areas are often located close to the coast or rivers basins, making them susceptible to rising sea levels and impacts of extreme weather events. Risks can be expected to be higher for poor households due to settlement in less safe areas and poorer housing (Barata et al. 2011 ), potentially perpetuating existing inequalities. On the other hand, cities might offer more efficient adaptation potentials. To date the consequences of climate change for cities and urbanization are still to be determined in detail but depend heavily on factors like location, size and level of development as well as governance capacities. Making cities, their population and their infrastructure resilient to climate change will be decisive for future development. The main challenge here is to better connect the research fields of environmental and urban economics to understand the drivers and dynamic effects of climate change on urbanization and resulting economic development, on adaptation costs and benefits and on the role of institutions. Insights from regional, political and behavioral economics can help shape effective governance to enhance resilience of cities to climate change.

Health and epidemiological environment Environmental degradation can have profound implications for human health. These implications lead to direct as well as indirect challenges for economic decision making, economic development and thus economic research. While many of these challenges might not be new per se, they can be severely exacerbated by, for example, climate change. Economic implications of long-term increases in vector-borne diseases and heat stress as well as pandemics like the COVID-19 and ozone formation still remain to be analyzed in depth, as do the costs and benefits of adaptation measures dedicated to mitigating these effects (Mendelsohn 2012 ). Climate change also affects human health indirectly through impacts on economic development, land use, and biodiversity - and vice versa. Failed emission reductions and bad environmental management especially impact developing countries negatively through direct effects on health but also through health effects of delayed poverty reduction (Fankhauser and Stern 2020 ). Exposure to diseases or epidemics can increase the risk of civil conflicts and violence (Cervellati et al. 2016 , 2018 ). While research has addressed effects of life-expectancy, diseases and premature mortality on long-run economic development (e.g. Ebenstein et al. 2015 ; Acemoglu and Johnson 2007 ), a thorough analysis of the climate-health-development nexus is still missing. Overall, most research carried out on the interaction between environment, climate and human health has focused on physical health and mortality. The effects of air pollution from the burning of fossil fuels or agriculture on premature deaths, cardiac conditions and respiratory diseases, for example, received not only renewed interest in the wake of recent scandals (see e.g. Alexander and Schwandt 2019 ) but have been an active field of research for a number of years (Schlenker and Walker 2016 ; Tschofen et al. 2019 ). Mental health implications like stress, anxiety or depression on the other hand have received much less attention although, for example, Chen et al. ( 2018 ) in a study on air pollution in China estimate these effects to be on a similar scale to costs arising from impacts on physical health. Also, Danzer and Danzer ( 2016 ) find substantial effects of a large energy-related disaster (the Chernobyl catastrophe) on subjective well-being and mental health. Economic research should take up the challenge and put more effort into the economic evaluation of mental health related effects of climate change and environmental degradation in general. Potential to analyze these and other health-related questions have risen substantially in the last years, method-wise as well as topical, with new large data sets becoming available. Big data from insurance companies, satellite imagery on pollution dispersion and effects of draughts, for example, can provide new insights into the dynamics between environmental changes and health. But digital technologies themselves also generate new research questions addressing, for example, risks, costs and benefits of these new technologies.

Carbon exposure and green finance The impact of climate change and of climate policy on the financial system is a topic of increasing public concern. The transition to a low-carbon economy poses a lot of challenges not only from physical risks and damages but also from transition risks. These accrue in such different areas as climate-related policy making, altered market behavior, changes in international trade patterns, technology development, and consumer behavior. To support a safe and gradual transition to a low-carbon economy, the financial sector needs to evaluate and eventually address the new risks associated with climate change and decarbonization in an efficient manner. There is widespread concern that financial markets currently lack sufficient information about the carbon exposure of assets, resulting in risks from climate change and climate policy for investments (Karydas and Xepapadeas 2018 ). If not anticipated by the markets, climate shocks also cause asset stranding, i.e. unanticipated and premature capital write-offs, downward revaluations, and conversion of assets to liabilities (Rozenberg et al. 2020 ; Bretschger and Soretz 2018 ). The same holds true for climate policies which are not or cannot be correctly anticipated by investors (Dietz et al. 2016 ; Stolbova et al. 2018 ; Sen and von Schickfus 2020 ). The growing awareness of these risks is reflected in the attention that policy makers have devoted to the development of transparency improving information systems and indicators in recent years. However, challenges related the design of these systems and indicators, e.g. with respect to an accurate and encompassing risk assessment, still remain. The importance of addressing these challenges is excerbated by prevalent network effects and counterparty risks that transmit climate-induced financial shocks from individual firms to the broad public holding their capital in stocks of fossil-fuel-related firms, investment funds, and pension funds, which all could suffer from stranded assets (Battiston et al. 2017 ). Divestment campaigns, shareholder engagement, and mandatory disclosure of climate-relevant financial information by companies and investors warrant further theoretical and empirical analysis. Also, a better understanding of the economics behind financing instruments like green bonds is only recently emerging (Agliardi and Agliardi 2019 ). Despite some early studies there is a knowledge gap with respect to the extent of climate and policy risks for central banks and regarding the potential significance of different channels connecting the risks in the real economy with monetary policy. Given the environmental and international policy perspective of the climate problem, the specific contribution of the financial sector and the central banks in the architecture of global climate policy has to be subject to further investigation.

Energy system transformation The transition from a fossil-based to a green economy is needed to combat climate change but requires a thorough transformation of energy systems (Pommeret and Schubert 2019 ) in developed as well as in developing countries. In industrialized countries, challenges arise from the structural transformation of highly complex energy systems and their linkage with other economic sectors. While one hundred years ago, it was the rapid dissemination of fossil-based industrial processes, transportation, and heating that resulted in wide-spread sectoral change, similar adjustments can be expected with the increasing importance of electricity for decarbonization. However, changing the use of energy technologies in practice involves decisions on different levels and constitutes a highly nonlinear process. Future power generation in many countries will increasingly rely on renewable energies like wind and solar energy. To offset intermittent power generation, more and better storage capacities of batteries or pumped hydropower will be needed (Ambec and Crampes 2019 ). Synthetic fuels, heat pumps, fuel cells and e-mobility will increasingly use electricity to replace fossil fuels not only in the power sector but also in traffic and heat generation. While the adoption of renewable technologies like wind and solar was often much faster than predicted in the past, the critical mass of market penetration has still to be reached in other areas to benefit from potential scale effects and cost decreases. Shape and speed of the energy transition are, however, highly dependent on a political process which is hard to predict for market participants. Policy and ecological risks, together with the long-run character of the energy and related infrastructure investments, pose a big challenge for research and practice. In this context, it is especially the economic potential of green hydrogen and/or synthetic fuels that is controversially discussed at present. As production costs are expected to fall (Glenk and Reichelstein 2019 ), interest in hydrogen is increasing sharply (IEA 2019 ) and new research questions arise. For developing countries, clean and decentralized renewable energy technologies offer big potentials for electrification and economic development. However, despite the potential for decarbonization and the reduction of other externalities and health hazards and despite the fact that more than 90% of the annual increase in power generation comes from emerging economies, research on the development and adoption of clean energy technologies still focuses mainly on the developed world. More research on the barriers and challenges for adoption in developing countries is needed, including sustainable financing, institutional framing and the design of regionally tailored policies.

Sustainability perspective on digitalization Digitalization and artificial intelligence are often seen as opportunities for enhancing the efficiency of energy and resource use. They offer new opportunities for circular economy, agriculture, monitoring of ecosystems and biodiversity, sustainable finance and decarbonization (see WBGU 2019 and literature within). However, they may also accelerate energy and resource use, increase inequality between regions and income groups and endanger sustainable development. Digitalization offers new access to markets, impacts market forms and shapes consumer behavior all of which can have extensive implications for the ecological, social and economic dimensions of sustainable development. Digitalization is a cross-cutting theme that reaches across spatial scales (from regional development to globalization) as well as temporal scales (from short-run impacts on energy systems to long-run adaptation to climate change). So far, the potentials and challenges for sustainable development that are associated with digital technologies have mostly been addressed outside of environmental and resource economics. The focus has been on topics such as data security and privacy or, for example, on the implications of the ”fourth industrial revolution” on employment and labor markets. Costs and benefits of digitization, the design and effectiveness of policies in industrialized as well as developing countries have garnered much less attention in the context of environmental, resource, energy and climate economics. Also, impacts of digitization on the behavior of economic agents resulting in, for example, rebound effects or changes in consumption patterns and environmental awareness, have not been addressed comprehensively (Gossar 2015 ). In all of these areas, our limited knowledge base creates opportunities and challenges for future research in the field. But, digitalization not only creates new research questions, it also provides new means to answer them. It has led to new developments in data science, big data analysis, machine learning and artificial intelligence that allow new insights into, for example, material flows, emission patterns and technology diffusion as well as the optimal design, implementation and effectiveness of regulation (Fowlie et al. 2019 ; Weersink et al. 2018 ; Graziano and Gillingham 2015 ).

Quantitative analysis of environmental use Recently, there has been a significant shift in the empirical methods used in economics from traditional regression analysis to random assignment and quasi-experiments. Arguably this can improve the capturing of causal relationships and reduce the biases of traditional study designs. In environmental economics, experimental and quasi-experimental approaches have been applied mainly for capturing individuals’ or firms’ decisions on the use of land, water, resources, and energy (e.g. Allcott 2011 ; Duflo et al. 2013 ; Deschenes et al. 2017 ). Wider applications of these rigorous methods in environmental economics and well-suited empirical designs are desirable but certainly challenging e.g. when assessing aggregate environmental costs from climate change or biodiversity loss. An important but underrated field in applied environmental economics is the ex-post empirical assessment of environmental policies. The challenge is not only to identify environmental externalities, causalities, and impact intensities but also to provide an accurate valuation of the cost of policies, because they vary widely especially in environmental economics. The traditional empirical methods remain to be important and are not simply replaced. The same holds true for empirical designs in a time, cross-country, or panel structure. The increasing availability of large or very large datasets with observations varying widely across time and space offers a different set of options to provide evidence on the impact of environmental damages or policies to abate them (e.g. Currie and Walker 2011 ; Martin et al. 2014 ; Zhang et al. 2018 ). Fast-growing computational power and machine learning provide even more avenues for fruitful applications in environmental economics (see e.g. Abrell et al. 2019 ) but the challenge to use computer power wisely and to derive results which are sufficiently robust remains demanding .

Structural assessment modelling and modelling transparency In an effort to better understand the ramifications of political decisions and technological developments on climate change, energy supply and resource extraction (to name but a few examples), increasingly sophisticated numerical models have been developed in recent decades. It is evident that quantitative economics analysis is important for policy advice. Yet despite their complexity, these models usually still adopt some very simplifying and sometimes ad-hoc assumptions. In particular assumptions used in integrated valuation models have come under heavy criticism in recent years (Stern 2013 ; Pindyck 2013 ). Simplifications concern market structures and market failures, the integration of risk and uncertainty as well as societal, institutional and cultural detail. Also, manifestations of climate change and damages come at very different regional and temporal scales, making a truly integrated assessment of the climate-ecosystem-economy nexus next to impossible. We see it as a major challenge for future research to provide more accurate foundations for integrated assessment models. While simplifications are needed to reduce computational complexity, they raise the question to which extent the results obtained render reliable insights into future developments. Asking for models that are detailed in every dimension and can answer every question resembles of course the search for the holy grail. However, the need for a better understanding of the model dynamics has already led to the development of a new generation of models which have a stronger foundation in theory (Golosov et al. 2014 , Bretschger and Karydas 2019 ). A better understanding of the limits of models and of the questions specific models can and cannot address is still needed as well as transparency in model development. More applied studies, assessments of global environmental trends under different economic assumptions often use ”scenarios” to describe future trajectories. The scenarios are mostly based on expert opinion and do not rely on estimates about the likelihood that such a trajectory will occur. It is also critical that the economics behind the scenarios is often neglected. Prominently, per capita income can be projected using endogenous growth theory, while population development can be evaluated using state-of-the-art theories on fertility and morbidity.

3 Conclusions

This article set out to highlight a number of challenges that are highly relevant for future research in the field of environmental and resource economics. The focus was mainly, although not exclusively, on topical issues. We only briefly touched upon on some methodological advancements that might have the power to further parts of our field. Big data, machine learning and artificial intelligence hold high promise in this regard but their limits and potentials for environment, climate and resource economics have yet to be fully understood.

It should have become clear, that a number of the challenges presented can only be addressed adequately by interdisciplinary research teams with relevant disciplines ranging from climate science, (computer) engineering, sociology, virology to soil sciences. In many cases, economists’ analysis and the derivation of sound policy recommendations require the knowledge available in these fields. However, such research cooperations are by no means one-way streets: Other disciplines need the input of economists in order to assess future development scenarios and implementability of solutions. The knowledge and data required for economics analysis does not always exist yet, but interdisciplinary cooperation can help to identify and close these gaps. Overall, the less economists have already worked on specific challenges, the harder it is to assess best research strategies and the potential for success. Take the digitization-sustainable-development-nexus as an example: best research strategies and success are extremely difficult to predict as not only is the related economics research still in its infancy but also the field itself is extremely dynamic.

As already pointed out in the beginning: We are aware that our selection is bound to create discontent and disagreement. Having said this, it should also be stated that we expect some of our challenges to be more or less universally agreed upon. This holds especially for the broader topics: for example, how to accomplish deep decarbonization; how to deal with risk and uncertainty; or how to assess the role of disruptive development. One reason for this lies in the encompassing nature of these topics. They are relevant for many of the other fields that we have pointed out: For behavioral analyses, the capacity to deal with disruptive change in the face of risk and uncertainty are essential. Loss of biodiversity and natural capital, land degradation, conflicts over resources and migration are exacerbated by climate change. The potential of digitization for sustainable development constitutes disruptive change in itself. Yet, all of these fields are not merely subfields of the more overarching themes, they raise important research questions in their own right.

Nevertheless, it is to be expected that it will be the more specific fields over which disagreement will arise: Are ‘land use and soil degradation’ more important than ‘fisheries’? Is the ‘institutional analysis of environmental policies’ of higher relevance than the ‘development of alternative welfare concepts’ (to pick out some random examples). Of course, there are more fields that could have been included and also, of course, there is no objective criterion for the inclusion or exclusion of fields. The selection of the challenges is based on the analysis and criteria presented in the first section but it is ultimately ours; we are happy if this paper contributes to a lively and constructive discussion about the future of our field.

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Bretschger, L., Pittel, K. Twenty Key Challenges in Environmental and Resource Economics. Environ Resource Econ 77 , 725–750 (2020). https://doi.org/10.1007/s10640-020-00516-y

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Types of Natural Resources

• Natural resource economics focuses on the supply, demand, and allocation of the Earth’s natural resources.

learning objectives

• Analyze natural resource economics and explain the types of natural resources that exist.

Natural Resource Economics

Natural resource economics focuses on the supply, demand, and allocation of the Earth’s natural resources. It’s goal is to gain a better understanding of the role of natural resources in the economy. Learning about the role of natural resources allows for the development of more sustainable methods to manage resources and make sure that they are maintained for future generations.The goal of natural resource economics is to develop an efficient economy that is sustainable in the long-run.

Importance of the Environment : This diagram illustrates how society and the economy are subsets of the environment. It is not possible for societal and economic systems to exist independently from the environment. For this reason, natural resource economics focuses on understanding the role of natural resources in the economy in order to develop a sufficient and sustainable economy that protects natural resources.

Natural resources are derived from the environment. Some of the resources are essential to survival, while others merely satisfy societal wants. Every man-made product in an economy is composed of natural resources to some degree.

There are numerous ways to classify the types of natural resources, they include the source of origin, the state of development, and the renewability of the resources.

In terms of the source of origin, natural resources can be divided into the following types:

• Biotic: these resources come from living and organic material, such as forests and animals, and include the materials that can be obtained them. Biotic natural resources also include fossil fuels such as coal and petroleum which are formed from organic matter that has decayed.
• Abiotic: these resources come from non-living and non-organic material. Examples of these resources include land, fresh water, air, and heavy metals (gold, iron, copper, silver, etc.).

Natural resources can also be categorized based on their stage of development including:

• Potential resources: these are resources that exist in a region and may be used in the future. For example, if a country has petroleum in sedimentary rocks, it is a potential resource until it is actually drilled out of the rock and put to use.
• Actual resources: these are resources that have been surveyed, their quantity and quality has been determined, and they are currently being used. The development of actual resources is dependent on technology.
• Reserve resources: this is the part of an actual resource that can be developed profitably in the future.
• Stock resources: these are resources that have been surveyed, but cannot be used due a lack of technology. An example of a stock resource is hydrogen.

Natural resources are also classified based on their renewability:

• Renewable natural resources: these are resources that can be replenished. Examples of renewable resources include sunlight, air, and wind. They are available continuously and their quantity is not noticeably affected by human consumption. However, renewable resources do not have a rapid recovery rate and are susceptible to depletion if they are overused.
• Non-renewable natural resources: these resources form extremely slow and do not naturally form in the environment. A resource is considered to be non-renewable when their rate of consumption exceeds the rate of recovery. Examples of non-renewable natural resources are minerals and fossil fuels.

There is constant worldwide debate regarding the allocation of natural resources. The discussions are centered around the issues of increased scarcity (resource depletion) and the exportation of natural resources as a basis for many economies (especially developed nations). The vast majority of natural resources are exhaustible which means they are available in a limited quantity and can be used up if they are not managed correctly. Natural resource economics aims to study resources in order to prevent depletion.

Natural resource utilization is regulated through the use of taxes and permits. The government and individual states determine how resources must be used and they monitor the availability and status of the resources. An example of natural resource protection is the Clean Air Act. The act was designed in 1963 to control air pollution on a national level. Regulations were established to protect the public from airborne contaminants that are hazardous to human health. The act has been revised over the years to continue to protect the quality of the air and health of the public in the United States.

Wind : Wind is an example of a renewable natural resource. It occurs naturally in the environment and has the ability to replenish itself. It has also been used as a form of energy development through wind turbines.

Basic Economics of Natural Resources

Natural resource economics focuses on the supply, demand, and allocation of the Earth’s natural resources to create a more efficient economy.

• Explain basic natural resource economics

Natural resource economics focuses on the supply, demand, and allocation of the Earth’s natural resources. The main objective of natural resource economics is to gain a better understanding of the role of natural resources in the economy. By studying natural resources, economists learn how to develop more sustainable methods of managing resources to ensure that they are maintained for future generations. Economists study how economic and natural systems interact in order to develop an efficient economy.

As a field of academic research, natural resource economics addresses the connections and interdependence between human economies and natural ecosystems. The focus is how to operate an economy within the ecological constraints of the earth’s natural resources.

Natural Resource Economics : This diagram illustrates that society and the economy are subsets of the environment. It is not possible for social and economic systems to exist independently from the environment. Natural resource economics focuses on the demand, supply, and allocation of natural resources to increase sustainability.

Areas of Study

Economists study the commercial and recreational use and exploitation of resources. Traditionally, natural resource economics focused on fishery, forestry, and mineral models. However, in recent years many more topics have become increasingly important, including air, water, and the global climate. Natural resource economics is studied on an academic level, and the findings are used to shape and direct policy-making for environmental issues.

Examples of areas of study in natural resource economics include:

• welfare theory
• pollution control
• resource exhaustibility
• environmental management
• resource extraction
• non-market valuation
• environmental policy

Additionally, research topics of natural resource economists can include topics such as the environmental impacts of agriculture, transportation and urbanization, land use in poor and industrialized countries, international trade and the environment, and climate change.

Impact of Natural Resource Economics

The findings of natural resource economists are used by governments and organizations to better understand how to efficiently use and sustain natural resources. The findings are used to gain insight into the following environmental areas:

• Extraction: the process of withdrawing resources from nature. Extractive industries are a basis for the primary sector of the economy. The extraction of natural resources substantially increases a country’s wealth. Economists study extraction rates to make sure that resources are not depleted. Also, if resources are extracted too quickly, the sudden inflow of money can cause inflation. Economists seek to maintain a sense of balance within extraction industries.
• Depletion: the using up of natural resources, which is considered to be a global sustainable development issue. Many governments and organizations have become increasingly involved in preserving natural resources. Economists provide data to determine how to balance the needs of societies now and preserve resources for the future.
• Protection: the preservation of natural resources for the future. The findings of economists help governments and organization develop measures of protection to sustain natural resources. Protection policies state the necessary actions internationally, nationally, and individually that must take place to control natural resource depletion that is a result of human activity.
• Management: the use of natural resources taking into account economic, environmental, and social concerns. This process deals with managing natural resources such as land, water, soil, plants, and animals. Particular focus is placed on how the preservation of natural resources impacts the quality of life now and for future generations.

Externalities and Impacts on Resource Allocation

Production and use of resources can have a positive or negative effect on the allocation of the natural resources.

• Examine externalities and how they the impact resource allocation of natural resources.

Resource Allocation

Resource allocation is division of goods for the use of production within the economy. The needs and wants of society as well as industries impact what is produced. Suppliers focus on producing the varieties of goods and services that will yield the greatest satisfaction to consumers. In the long run, externalities directly impact resource allocation. It must be determined whether the production, as well as the process of production, creates more benefits that costs for the producers, consumers, and society as a whole.

Externalities

An externality is a cost or benefit that affects a party who did not choose to incur the cost or benefit. In regards to natural resources, production and use of resources can have a positive or negative effect on the allocation of the resources.

External Costs

A negative externality, also called the external cost, imposes a negative effect on a third party to an economic transaction. Many negative externalities impact natural resources negatively because of the environmental consequences of production and use. For example, air pollution from factories and vehicles can cause damage to crops. Likewise, water pollution has a negative impact of plants and animals.

Negative externality : Air pollution from vehicles is an example of a negative externality. It affects other than those who drive the vehicle and those who sell the gas.

In the case of negative externalities, the marginal private cost of consuming a good is less than the marginal social or public cost. The marginal social benefit should equal the marginal social cost (i.e. production should only be increased when the marginal social benefit exceeds the marginal social cost). When external costs are present, the use of natural resources is inefficient because the social benefit is less than the social cost. In other words, society and the natural resources involved would have been better off if the natural resources had not been used at all.

Developed countries use more natural resources and must enact sustainable development plan for the use of resources. Human needs must be met, but the environment and natural resources must be preserved. Examples of resource depletion include mining, petroleum extraction, fishing, forestry, and agriculture.

External Benefits

Positive externalities, also referred to as external benefits, impose a positive effect on a third party. An example of a positive externality is when crops are pollinated by bees from a neighboring bee farm. In order to achieve the socially optimal equilibrium, the marginal social benefit should equal the marginal social cost (i.e. production should be increased as long as the marginal social benefit exceeds the marginal social cost). Assuming that natural resources are used and also sustained, the external benefits of goods produced by natural resources impacts the majority of the public in a positive way.

• Every man-made product in an economy is composed of natural resources to some degree.
• Natural resources can be classified as potential, actual, reserve, or stock resources based on their stage of development.
• Natural resources are either renewable or non-renewable depending on whether or not they replenish naturally.
• Natural resource utilization is regulated through the use of taxes and permits. The government and individual states determine how resources must be used and they monitor the availability and status of the resources.
• As a field of academic research, natural resource economics addresses the connections and interdependence between human economies and natural ecosystems.
• By studying natural resources, economists learn how to develop more sustainable methods of managing resources to ensure that they are maintained for future generations.
• Natural resource economics is studied on an academic level, and the findings are used to shape and direct policy-making for environmental issues. These issues include resource extraction, depletion, protection, and management.
• Natural resource economics findings impact policies for environmental work including issues such as extraction, depletion, protection, and management.
• An externality is a cost or benefit that affects a party who did not choose to incur the cost or benefit.
• A negative externality, also called the external cost, imposes a negative effect on a third party.
• When external costs are present, the market equilibrium use of natural resources is inefficient because the social benefit is less than the social cost. In other words, society would have been better off if fewer natural resources had been used.
• Positive externalities, also referred to as external benefits, imposes a positive effect on a third party.
• Assuming that natural resources are used and also sustained, the external benefits of goods produced by natural resources impacts the majority of the public in a positive way.
• natural resource : Any source of wealth that occurs naturally, especially minerals, fossil fuels, timber, etc.
• Renewable : Sustainable; able to be regrown or renewed; having an ongoing or continuous source of supply; not finite.
• depletion : The consumption of a resource faster than it can be replenished.
• sustainable : Able to be sustained for an indefinite period without damaging the environment, or without depleting a resource.
• externality : An impact, positive or negative, on any party not involved in a given economic transaction or act.

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Going beyond averages

Global projections of the economic impacts of climate change have usually focused on rising average temperatures. Now, two studies depict more complex and gloomier scenarios by incorporating variability in temperature and precipitation.

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Home » 500+ Economics Research Topics

500+ Economics Research Topics

Economics is a vast and fascinating field that explores how individuals, businesses, and governments make decisions about the allocation of resources. As such, it provides a wealth of research opportunities for those interested in understanding and analyzing the complexities of modern society. From macroeconomic issues such as globalization and monetary policy, to microeconomic topics such as consumer behavior and market competition, there are numerous research topics that economists can investigate. In this post, we will explore some of the most interesting and relevant economics research topics that are shaping our world today.

Economics Research Topics

Economics Research Topics are as follows:

• The impact of technological change on income inequality.
• An analysis of the relationship between exchange rates and foreign direct investment.
• The effects of tax incentives on small business growth and development.
• The determinants of economic growth in developing countries.
• The impact of globalization on economic growth and development.
• An analysis of the effects of the minimum wage on employment and poverty.
• The role of central banks in managing inflation and economic stability.
• An investigation into the factors influencing consumer behavior and spending.
• An analysis of the impact of trade liberalization on economic growth.
• The effects of income inequality on social welfare and economic stability.
• The role of international trade in economic development.
• An investigation into the relationship between education and economic growth.
• An analysis of the effects of corruption on economic growth and development.
• The impact of the gig economy on employment and wages.
• An investigation into the causes and consequences of financial crises.
• The role of innovation in economic growth and development.
• An analysis of the impact of government spending on economic growth.
• The effects of globalization on the environment.
• The impact of climate change on economic growth and development.
• An investigation into the determinants of poverty and inequality.
• The role of entrepreneurship in economic growth and development.
• An analysis of the effects of monetary policy on economic growth and stability.
• The impact of immigration on labor markets and economic growth.
• An investigation into the factors influencing international trade flows.
• An analysis of the effects of foreign aid on economic development.
• The role of financial intermediaries in economic development.
• An investigation into the causes and consequences of income inequality.
• The impact of trade agreements on economic growth and development.
• An analysis of the effects of government regulation on business and economic growth.
• The role of technology transfer in economic development.
• An investigation into the effects of economic sanctions on trade and economic growth.
• The impact of population growth on economic development.
• An analysis of the effects of infrastructure investment on economic growth.
• The role of natural resources in economic development.
• An investigation into the effects of labor market policies on economic growth and employment.
• The impact of financial innovation on economic growth and stability.
• An analysis of the effects of income tax policy on economic growth and income distribution.
• The role of social capital in economic development.
• An investigation into the impact of economic policies on international trade.
• The effects of financial liberalization on economic growth and stability.
• The impact of urbanization on economic development.
• An analysis of the effects of international migration on labor markets and economic growth.
• The role of institutions in economic development.
• An investigation into the effects of exchange rate volatility on international trade.
• The impact of demographic change on economic growth and development.
• An analysis of the effects of government debt on economic growth and stability.
• The role of foreign investment in economic development.
• An investigation into the effects of labor market flexibility on economic growth and employment.
• The impact of intellectual property rights on innovation and economic growth.
• An analysis of the effects of economic inequality on social mobility and economic growth.
• The impact of COVID-19 on the global economy.
• The role of financial markets in economic growth.
• The effectiveness of monetary policy in stabilizing the economy.
• The relationship between income inequality and economic growth.
• The impact of government regulations on business activity.
• The role of technology in shaping the future of the economy.
• The effect of globalization on the labor market.
• The impact of trade policy on economic growth.
• The relationship between education and economic growth.
• The effectiveness of fiscal policy in stimulating economic growth.
• The impact of immigration on the labor market.
• The effect of tax policy on economic growth.
• The role of entrepreneurship in economic development.
• The impact of environmental regulations on economic growth.
• The effect of international capital flows on the economy.
• The relationship between innovation and economic growth.
• The impact of demographic changes on the economy.
• The role of infrastructure investment in economic growth.
• The effect of monetary policy on income inequality.
• The impact of government debt on economic growth.
• The relationship between corruption and economic growth.
• The effect of globalization on income inequality.
• The impact of education on income inequality.
• The role of social welfare programs in reducing poverty.
• The effect of minimum wage laws on the labor market.
• The impact of health care policy on economic growth.
• The relationship between energy prices and economic growth.
• The effect of government subsidies on business activity.
• The impact of exchange rate fluctuations on trade.
• The role of financial innovation in economic development.
• The effect of social media on consumer behavior.
• The impact of consumer confidence on economic growth.
• The relationship between economic growth and political stability.
• The effect of demographic changes on income inequality.
• The impact of government spending on economic growth.
• The role of labor unions in the labor market.
• The effect of natural disasters on the economy.
• The relationship between economic growth and environmental sustainability.
• The effect of corporate social responsibility on business activity.
• The impact of intellectual property rights on innovation.
• The effect of cultural differences on business activity.
• The impact of financial crises on the economy.
• The relationship between economic growth and health outcomes.
• The effect of government corruption on economic growth.
• The impact of demographic changes on the labor market.
• The effect of foreign aid on economic growth.
• The impact of technological change on the labor market.
• The effect of monetary policy on income distribution.
• The impact of trade agreements on economic growth
• The effect of corruption on economic development
• The relationship between financial development and economic growth
• The impact of foreign aid on economic growth in developing countries
• The role of innovation in promoting economic growth
• The impact of globalization on income inequality
• The relationship between inflation and economic growth
• The role of natural resources in economic development
• The impact of government expenditure on economic growth
• The relationship between income distribution and economic growth
• The impact of monetary policy on economic growth
• The role of education in promoting economic growth
• The impact of entrepreneurship on economic development
• The relationship between taxation and economic growth
• The impact of infrastructure on economic growth
• The role of international trade in economic development
• The impact of fiscal policy on economic growth
• The relationship between financial liberalization and economic growth
• The impact of economic integration on economic growth
• The role of institutions in promoting economic development
• The impact of foreign direct investment on economic growth
• The relationship between inequality and economic growth
• The impact of social welfare programs on economic growth
• The role of technology in promoting economic growth
• The impact of political instability on economic growth
• The relationship between corruption and economic growth
• The impact of labor market policies on economic growth
• The role of human capital in promoting economic development
• The impact of health care on economic growth
• The relationship between exchange rates and economic growth
• The impact of foreign trade on income distribution
• The role of entrepreneurship in economic development
• The impact of environmental policies on economic growth
• The relationship between foreign aid and poverty reduction
• The impact of financial sector reforms on economic growth
• The role of social capital in promoting economic development
• The impact of regional integration on economic growth
• The relationship between public investment and economic growth
• The impact of monetary policy on income distribution
• The role of international migration in economic development
• The impact of labor market flexibility on economic growth
• The relationship between trade and technology transfer
• The impact of institutional quality on economic growth
• The role of financial sector development in promoting economic growth
• The impact of regional inequality on economic growth
• The relationship between education and poverty reduction
• The impact of foreign debt on economic growth
• The role of social protection in promoting economic development
• The impact of energy policies on economic growth
• The relationship between foreign trade and environmental sustainability
• The impact of international trade on income inequality.
• The relationship between public debt and economic growth.
• The effect of tax policy on international capital flows.
• The impact of government subsidies on technological innovation.
• The role of financial development in reducing poverty.
• The effect of regulation on market structure.
• The impact of globalization on financial stability.
• The relationship between financial development and income inequality.
• The effect of fiscal policy on long-term economic growth.
• The impact of financial frictions on business cycles.
• The role of international capital flows in financial crises.
• The effect of natural resource abundance on economic growth.
• The impact of fiscal decentralization on economic growth.
• The relationship between institutions and economic growth.
• The effect of financial innovation on market efficiency.
• The impact of international migration on the labor market.
• The role of corporate governance in firm performance.
• The effect of monetary policy on the housing market.
• The impact of environmental policy on the energy sector.
• The effect of competition policy on market outcomes.
• The impact of technology adoption on productivity.
• The effect of regulation on consumer welfare.
• The impact of trade policy on export performance.
• The relationship between social capital and economic growth.
• The effect of labor market institutions on the gender wage gap.
• The impact of financial liberalization on economic growth.
• The role of human capital in technological innovation.
• The effect of trade openness on innovation.
• The impact of natural disasters on economic growth.
• The relationship between inequality and economic growth.
• The effect of exchange rate volatility on international trade.
• The impact of banking regulation on financial stability.
• The role of venture capital in financing innovation.
• The effect of regional trade agreements on economic growth.
• The impact of financial development on economic growth in emerging markets.
• The relationship between government spending and economic growth.
• The effect of monetary policy on credit markets.
• The impact of innovation on firm performance.
• The role of social networks in job search and labor market outcomes.
• The effect of international capital flows on income inequality.
• The impact of natural resource dependence on political instability.
• The relationship between financial development and income mobility.
• The effect of tax competition on fiscal policy.
• The impact of labor market institutions on unemployment.
• The role of infrastructure investment in economic development.
• The effect of monetary policy on financial market volatility.
• The impact of fiscal policy on income redistribution.
• The role of digital currencies in the future of finance.
• The effects of the gig economy on labor markets.
• The impact of artificial intelligence on economic growth.
• The relationship between climate change and economic growth.
• The role of blockchain technology in supply chain management.
• The effects of automation on the labor market.
• The impact of E-commerce on traditional retail industries.
• The relationship between social media and consumer behavior.
• The role of data analytics in business decision-making.
• The effects of globalization on income inequality.
• The impact of digital platforms on the sharing economy.
• The relationship between education and economic growth in the digital age.
• The role of fintech in financial inclusion.
• The effects of trade policies on global supply chains.
• The impact of corporate social responsibility on business performance.
• The relationship between immigration and economic growth.
• The role of venture capital in stimulating innovation and economic growth.
• The effects of the circular economy on sustainable development.
• The impact of cybersecurity threats on the global economy.
• The relationship between gender inequality and economic growth.
• The role of green finance in promoting sustainable development.
• The effects of automation on income inequality.
• The impact of the sharing economy on traditional business models.
• The relationship between human capital and economic growth.
• The role of technology transfer in international trade.
• The effects of regulatory frameworks on innovation.
• The impact of government policies on the growth of start-up companies.
• The role of venture philanthropy in social entrepreneurship.
• The effects of digital disruption on the financial services industry.
• The impact of the circular economy on job creation.
• The relationship between health outcomes and economic growth.
• The role of impact investing in social and environmental sustainability.
• The effects of trade agreements on the global economy.
• The impact of entrepreneurship on economic growth.
• The relationship between innovation and income inequality.
• The role of corporate governance in sustainable business practices.
• The effects of immigration policies on labor market outcomes.
• The impact of international capital flows on economic development.
• The relationship between corporate social responsibility and financial performance.
• The role of innovation clusters in regional economic development.
• The effects of digitalization on productivity.
• The impact of the sharing economy on urban development.
• The relationship between social entrepreneurship and economic growth.
• The role of government policies in promoting sustainable development.
• The effects of demographic changes on the economy.
• The impact of digitalization on economic development in developing countries.
• The relationship between consumer behavior and sustainability.
• The role of private equity in stimulating economic growth.
• The impact of government spending on economic growth
• The effects of minimum wage laws on employment and poverty rates
• The role of government subsidies in promoting renewable energy adoption
• The impact of trade liberalization on economic growth and income inequality
• The effectiveness of monetary policy in managing inflation and unemployment
• The determinants of foreign direct investment flows in emerging markets
• The role of financial markets in economic development
• The impact of globalization on the labor market
• The effects of tax policies on economic growth and income distribution
• The role of human capital in economic growth and development
• The economics of climate change and the environment
• The effects of population aging on economic growth and social welfare
• The impact of social safety net programs on poverty reduction
• The effects of corruption on economic development and political stability
• The impact of technological innovation on labor market outcomes
• The economics of healthcare policy and healthcare markets
• The determinants of entrepreneurship and small business success
• The effects of income inequality on economic growth and social welfare
• The economics of urbanization and regional development
• The role of foreign aid in promoting economic development
• The impact of fiscal policy on economic growth and government debt
• The effects of financial regulation on economic stability and growth
• The economics of education policy and school choice
• The determinants of consumer behavior and market outcomes
• The role of multinational corporations in the global economy
• The effects of immigration on labor markets and economic growth
• The impact of monetary policy on financial markets and stability
• The economics of natural resource management and conservation
• The determinants of industrial competitiveness and productivity
• The effects of trade policies on economic growth and regional integration
• The role of institutional quality in economic development
• The impact of technological change on income inequality
• The economics of innovation and intellectual property rights
• The effects of financial globalization on emerging markets
• The role of infrastructure investment in promoting economic development
• The impact of exchange rate policies on international trade and investment
• The determinants of consumer credit and debt behavior
• The effects of social media and online platforms on market competition
• The role of international organizations in global economic governance
• The impact of natural disasters on economic development and poverty
• The economics of gender inequality and discrimination
• The effects of government regulation on business behavior and market outcomes
• The role of behavioral economics in understanding market behavior
• The impact of public investment on economic growth and social welfare
• The determinants of household saving and investment behavior
• The economics of renewable energy and clean technology adoption
• The effects of economic sanctions on international trade and investment
• The role of information and communication technologies in economic development
• The impact of globalization on income distribution and poverty
• The economics of international migration and remittances.
• The effects of income inequality on economic development
• An analysis of the efficiency of market structures in different industries
• The role of technology in economic growth and development
• The impact of international trade on economic development
• An investigation into the determinants of inflation
• The effects of labor market regulations on employment and productivity
• An analysis of the relationship between economic growth and environmental sustainability
• The role of institutions in economic development
• The impact of foreign aid on economic development
• The effects of taxation on economic growth
• An investigation into the factors that contribute to economic fluctuations
• The effects of globalization on income distribution
• The impact of education on economic growth and development
• The role of infrastructure in economic development
• The effects of trade liberalization on economic growth
• An analysis of the impact of exchange rates on trade and investment
• The relationship between innovation and economic growth
• The impact of government policies on the agricultural sector
• The effects of corruption on economic development
• An investigation into the effects of demographic changes on economic growth
• The impact of financial crisis on economic growth
• The effects of foreign direct investment on economic growth
• An analysis of the effects of natural resources on economic development
• The impact of healthcare on economic growth
• The effects of international migration on the economy
• The relationship between poverty and economic development
• The role of infrastructure in promoting economic growth
• An investigation into the effects of regional economic integration
• The impact of foreign trade on economic development
• The effects of government regulation on economic growth
• An analysis of the role of technology in improving economic efficiency
• The impact of population growth on economic development
• The effects of government spending on income inequality
• The role of the financial system in economic growth
• The impact of energy policies on economic development
• An investigation into the effects of intellectual property rights on economic growth
• The effects of trade on labor markets
• The role of social capital in economic development
• The effects of regional inequality on economic development
• An analysis of the impact of financial market development on economic growth
• The impact of international trade on technological progress
• The effects of financial regulation on economic growth
• The role of institutions in promoting entrepreneurship
• The impact of healthcare policies on economic growth
• An investigation into the effects of income redistribution on economic growth.

About the author

Muhammad Hassan

Researcher, Academic Writer, Web developer

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Economics Research Guide

Economics is a field of study that deals with the production, distribution, and consumption of goods and services. As such, it has a profound impact on our lives and society as a whole. Given its importance, economics research is a critical component of the field, as it helps to advance our understanding of economic principles, and inform policy decisions. In this guide, we will explore a range of economics research paper topics, organized into several categories, each with its own unique focus and scope.

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This guide is intended for students and researchers who are interested in understanding the complexities of economic systems, and how they relate to broader social and political issues. Through a careful examination of these topics, readers will gain insights into the ways in which economics influences our daily lives, and the world around us.

The following sections will provide an overview of the categories of economics research paper topics that will be explored in this guide. Each category will be accompanied by a list of potential research paper topics that can serve as a starting point for students and researchers looking to explore these areas in greater depth. By the end of this article, readers will have a deeper appreciation of the breadth and depth of the field of economics, and the important role it plays in shaping our world.

Economics is a vast field of study that covers a wide range of topics and sub-disciplines. To help students navigate this broad subject area, economics research paper topics can be organized into several categories. This approach not only assists in topic selection but also enables students to explore various aspects of economics in a more systematic manner. In this section, we will discuss 20 categories of economics research paper topics that can serve as a starting point for students looking to write a research paper in economics.

• Economic Theory

Economic theory is the foundation of modern economics, providing a framework for understanding economic behavior and decision-making. Research in economic theory can focus on topics such as game theory, decision-making under uncertainty, and the design of economic mechanisms. Potential research paper topics within economic theory include:

• The role of information in economic decision-making
• The effects of taxation on economic behavior
• The design of auctions in different economic contexts
• The efficiency of different market structures
• The impact of externalities on market outcomes
• The role of social norms in economic behavior
• The implications of bounded rationality for economic theory
• The relationship between inequality and economic growth
• The impact of financial frictions on economic outcomes
• The use of experimental methods in economic theory research
• Microeconomics

Microeconomics is the study of how individuals and firms make decisions in the context of limited resources. Research in microeconomics can explore topics such as consumer behavior, market structure, and the impact of public policy on individual and firm behavior. Potential research paper topics within microeconomics include:

• The economics of discrimination and inequality
• The impact of regulation on market outcomes
• The role of innovation in market competition
• The economics of information and the internet
• The relationship between education and earnings
• The impact of trade on local labor markets
• The economics of healthcare and insurance markets
• The impact of minimum wage laws on employment
• The economics of environmental regulation
• The role of non-profits and social enterprises in market competition
• Macroeconomics

Macroeconomics is concerned with the behavior of the economy as a whole, including topics such as economic growth, inflation, and monetary policy. Research in macroeconomics can explore topics such as the causes and consequences of economic fluctuations, the role of government policy in stabilizing the economy, and the impact of globalization on macroeconomic outcomes. Potential research paper topics within macroeconomics include:

• The impact of fiscal policy on economic growth
• The role of central banks in maintaining price stability
• The relationship between inflation and unemployment
• The impact of monetary policy on exchange rates
• The causes and consequences of financial crises
• The economics of international trade and exchange rate regimes
• The impact of technology on economic growth
• The role of government in promoting long-term economic growth
• The impact of demographic changes on macroeconomic outcomes
• The use of macroeconomic models to forecast economic outcomes
• Econometrics

Econometrics is the application of statistical and mathematical methods to economic data. Research in econometrics can explore topics such as causal inference, time-series analysis, and the modeling of complex economic systems. Potential research paper topics within econometrics include:

• The use of machine learning algorithms in econometric analysis
• The impact of measurement error on econometric results
• The role of panel data in econometric analysis
• The use of quasi-experimental methods in causal inference
• The impact of model selection on econometric results
• The estimation of dynamic models in econometrics
• The role of Bayesian methods in econometric analysis
• The use of structural models in econometric analysis
• The impact of omitted variable bias on econometric results
• The use of econometric methods to study income inequality
• International Economics

International economics refers to the study of economic interactions among countries. It analyzes trade, investment, finance, and migration across borders. International economics is concerned with the causes and consequences of international trade, the determinants of trade flows, the impact of globalization on economic growth and inequality, and the effects of trade policy on national welfare. International economics research papers can address topics such as:

• The impact of trade liberalization on economic growth and income distribution.
• The role of institutions in promoting international trade.
• The determinants of foreign direct investment flows.
• The impact of globalization on labor markets in developed and developing countries.
• The effects of trade policies, such as tariffs and quotas, on international trade and welfare.
• The role of exchange rates in international trade and finance.
• The impact of international trade on the environment.
• The economic implications of regional trade agreements, such as the European Union.
• The impact of trade on human rights.
• The effectiveness of development aid in promoting economic growth in developing countries.
• Behavioral Economics

Behavioral economics is the study of how psychological and cognitive factors influence economic decision-making. Behavioral economics seeks to explain why people make economic decisions that appear to be irrational or suboptimal, and how these decisions can be influenced by various factors, such as social norms, emotions, and cognitive biases. Research papers in behavioral economics can focus on topics such as:

• The impact of social norms on economic decision-making.
• The role of emotions in financial decision-making.
• The effect of framing and context on consumer behavior.
• The impact of cognitive biases, such as overconfidence and loss aversion, on decision-making.
• The implications of bounded rationality for economic models and policies.
• The impact of incentives on economic behavior.
• The role of trust in economic decision-making.
• The effect of social networks on economic behavior.
• The impact of reputation and social status on economic decisions.
• The role of identity and self-image in economic behavior.
• Game Theory

Game theory is a branch of economics that studies strategic decision-making in situations where the outcome of a decision depends on the actions of other decision-makers. Game theory is used to analyze a wide range of economic interactions, such as auctions, oligopolies, and bargaining situations. Research papers in game theory can address topics such as:

• The impact of information on strategic decision-making.
• The effect of repeated interactions on cooperation and competition.
• The role of commitment and credibility in strategic interactions.
• The impact of uncertainty and risk on decision-making.
• The implications of incomplete information for strategic behavior.
• The effect of network structure on strategic interactions.
• The role of reputation and trust in strategic interactions.
• The impact of strategic interaction on social welfare.
• The effect of communication on strategic decision-making.
• The implications of bounded rationality for game-theoretic models.

Development Economics

Development economics is a branch of economics that focuses on economic development, specifically the process of economic growth, poverty reduction, and improving the standards of living in developing countries. Development economics examines the social, economic, and political factors that contribute to or impede economic growth and development. Possible research paper topics in this category include:

• The impact of foreign aid on economic development in developing countries.
• The role of microfinance in poverty alleviation.
• The effects of globalization on economic development in developing countries.
• The impact of corruption on economic development in developing countries.
• The role of human capital in economic growth and development.
• The effects of trade liberalization on economic growth and development.
• The relationship between income inequality and economic growth in developing countries.
• The role of foreign direct investment (FDI) in economic development in developing countries.
• The effects of political instability on economic growth and development in developing countries.
• The impact of natural resource endowments on economic growth and development in developing countries.

Financial Economics

Financial economics is a subfield of economics that focuses on the financial markets and financial instruments, such as stocks, bonds, and derivatives. This field also includes the study of financial institutions and their roles in the economy. Some potential research paper topics in this category include:

• The impact of monetary policy on financial markets.
• The role of financial intermediaries in the economy.
• The impact of financial regulation on financial markets.
• The effects of financial innovation on financial markets and the economy.
• The impact of international financial markets on the domestic economy.
• The relationship between financial markets and the real economy.
• The effects of financial crises on financial markets and the economy.
• The role of credit markets in the economy.
• The impact of interest rates on financial markets and the economy.
• The effects of quantitative easing on financial markets and the economy.

Industrial Organization

Industrial organization is a subfield of economics that focuses on the study of firms, markets, and industries. This field examines the behavior of firms and the market structure in which they operate. Potential research paper topics in this category include:

• The impact of mergers and acquisitions on market competition.
• The relationship between market structure and firm behavior.
• The effects of antitrust regulation on market competition.
• The role of patents and intellectual property rights in industry.
• The effects of market power on consumer welfare.
• The impact of technological change on industry structure.
• The role of advertising and branding in creating market power.
• The effects of network externalities on industry structure.
• The impact of vertical integration on market competition.
• The effects of globalization on industry structure and market competition.

Labor Economics

Labor economics is a subfield of economics that focuses on the study of labor markets and the behavior of workers and firms in those markets. Possible research paper topics in this category include:

• The impact of minimum wage laws on employment and wages.
• The effects of labor unions on wages and employment.
• The role of discrimination in labor markets.
• The impact of immigration on wages and employment.
• The relationship between education and earnings.
• The effects of job training programs on employment and wages.
• The impact of labor market regulations on employment and wages.
• The effects of technology on employment and wages.
• The role of gender in labor market outcomes.
• The impact of globalization on labor markets and employment.

Environmental Economics

Environmental economics is a branch of economics that focuses on the study of how economic activity affects the environment and how policies and regulations can be designed to mitigate negative impacts while promoting sustainable development. Some potential research paper topics in environmental economics are:

• The effectiveness of carbon pricing in reducing greenhouse gas emissions.
• The economic impact of the Clean Air Act on the US economy.
• The role of property rights in promoting conservation of natural resources.
• The impact of environmental regulations on the competitiveness of domestic industries.
• The trade-offs between economic development and environmental protection in developing countries.
• The role of international trade in driving global deforestation.
• The economics of water scarcity and the allocation of water resources.
• The impact of climate change on agricultural productivity and food security.
• The effectiveness of eco-labeling programs in promoting sustainable consumption.
• The economics of renewable energy development and the transition away from fossil fuels.

Health Economics

Health economics is the study of how resources are allocated in the healthcare sector. It involves analyzing the economic factors that influence healthcare, such as the demand for healthcare services, the supply of healthcare providers, and the financing of healthcare systems. Potential research paper topics in health economics include:

• The impact of healthcare financing on health outcomes.
• The economics of healthcare reform.
• The relationship between healthcare spending and health outcomes.
• The role of incentives in healthcare delivery.
• The economics of healthcare technology.
• The effect of insurance coverage on healthcare utilization.
• The economic burden of chronic diseases on healthcare systems.
• The impact of globalization on healthcare systems.
• The economics of mental health.
• The economics of public health interventions.

Agricultural Economics

Agricultural economics is the study of the production, distribution, and consumption of agricultural goods and services. It analyzes how the agricultural sector operates and interacts with other sectors of the economy, as well as the economic principles that govern it. Some potential research paper topics in this area include:

• The impact of climate change on agriculture.
• The economics of land use and farming practices.
• Agricultural subsidies and their effects on farmers and consumers.
• The role of agriculture in rural development.
• Agricultural trade policies and their impact on domestic and international markets.
• The economics of genetically modified crops.
• The use of technology in agriculture and its economic implications.
• The economics of food safety and food security.
• The role of agricultural cooperatives in promoting economic development.
• The impact of globalization on the agricultural sector.

Urban and Regional Economics

Urban and regional economics is concerned with the economic issues that arise in urban and regional contexts. It examines how economic activities are distributed across geographic areas and how policies can be designed to promote regional growth and development. Some potential research paper topics in this area include:

• The economic impact of gentrification on urban neighborhoods.
• The role of transportation infrastructure in urban and regional development.
• The economics of urban sprawl and its impact on the environment.
• The economics of regional trade agreements.
• The economic impact of sports stadiums on local communities.
• The role of land use regulations in shaping urban and regional development.
• The economics of urban crime and its impact on local economies.
• The economics of cultural districts and their impact on local economies.
• The impact of immigration on urban and regional economies.
• The economics of regional innovation systems and their role in promoting economic growth.
• Public Economics

Public economics is the study of the role of government in the economy. It examines how government policies and programs affect economic outcomes and how they can be designed to promote efficiency and equity. Some potential research paper topics in this area include:

• The economics of taxation and tax policy.
• The impact of government spending on economic growth and development.
• The economics of social welfare programs.
• The economics of healthcare policy and healthcare reform.
• The role of government in promoting environmental sustainability.
• The economics of education policy and education reform.
• The economics of public goods and common pool resources.
• The impact of government regulations on business and economic activity.
• The economics of social insurance programs such as Social Security and Medicare.
• The economics of public-private partnerships and their role in promoting economic growth and development.

Energy Economics

Energy economics is the study of the production, consumption, and distribution of energy resources and their impact on the economy. It examines the economic principles that govern the energy sector and the policies that can be designed to promote energy efficiency and sustainability. Some potential research paper topics in this area include:

• The economics of renewable energy sources and their role in reducing greenhouse gas emissions.
• The impact of energy policies on energy security and national security.
• The economics of energy markets and energy pricing.
• The impact of energy consumption on the environment and public health.
• The economics of energy efficiency and energy conservation.
• The economics of energy storage and transmission.
• The role of government in promoting energy innovation and technology development.
• The impact of international energy markets on domestic energy policy.
• The economics of energy subsidies and their impact on energy markets.
• The economics of energy transition and its impact on the economy and society.

Education Economics

Education economics is a branch of economics that studies how education and the education system can impact economic outcomes. It explores the relationship between education and economic growth, productivity, and income distribution. Education economics research topics can range from the analysis of specific educational policies and programs to the broader societal impacts of education on economic development. Here are ten potential research paper topics in education economics:

• The impact of school choice policies on student achievement.
• The effectiveness of early childhood education programs in promoting long-term educational success and economic outcomes.
• The relationship between education and technological innovation.
• The impact of teacher quality on student outcomes and long-term economic success.
• The role of education in reducing income inequality.
• The economics of student loan debt and its impact on college attendance and graduation rates.
• The effect of private schools on educational attainment and economic outcomes.
• The economics of college athletics and its impact on university finances and student outcomes.
• The role of education in promoting entrepreneurship and innovation.
• The impact of educational technology on student outcomes and economic development.

History of Economic Thought

The history of economic thought is a fascinating field that explores the evolution of economic ideas over time. It examines the development of economic theories, the contributions of different economists, and the historical context in which they worked. Some potential research paper topics in this category include:

• Adam Smith’s contribution to economic thought.
• The Marxist critique of capitalism.
• The role of the Austrian School in economic theory.
• Keynesian economics and the Great Depression.
• Milton Friedman’s monetarist theory.
• Behavioral economics and the rise of the “nudge” approach.
• The development of econometric modeling techniques.
• The influence of economic ideas on policy making.
• The evolution of the concept of economic growth.
• The relationship between economic thought and political ideologies.

Interdisciplinary Economics

Interdisciplinary economics combines principles and methodologies from different fields, such as psychology, sociology, anthropology, and political science, to better understand economic phenomena. This category includes research on topics such as:

• The economic dimensions of climate change.
• The role of institutions in economic development.
• The political economy of healthcare.
• The effects of globalization on inequality.
• The relationship between culture and economic behavior.
• The history of economic thought from a multidisciplinary perspective.
• The impact of technology on the labor market.
• The intersection of law and economics.
• The economics of happiness and well-being.
• The role of social networks in economic behavior.

Economics research paper topics are diverse and provide a wide range of opportunities for exploring the intricacies of the economy. Whether you’re interested in macro or microeconomics, development or environmental economics, or the history of economic thought, there are plenty of topics to choose from. By carefully selecting your research paper topic and utilizing expert advice and writing services, you can produce a high-quality paper that contributes to the ongoing discourse in the field of economics.

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Advice on Choosing Economics Research Paper Topics

Choosing an economics research paper topic can be challenging, especially if you’re not sure where to start. The key is to find a topic that is interesting to you and aligns with your research goals. Here are some expert tips to help you choose a great economics research paper topic:

• Read widely and stay updated : Keep up with the latest news and trends in economics by reading relevant articles, journals, and books. This will help you identify emerging topics and debates that could make for interesting research paper topics.
• Consider your audience : Before selecting a research paper topic, think about who your audience is and what they might be interested in. If you’re writing for an academic audience, you might choose a more technical or specialized topic. However, if you’re writing for a broader audience, you might choose a more accessible or relevant topic.
• Narrow your focus : Economics is a broad field, so it’s important to narrow your focus to a specific topic or question. This will help you avoid getting overwhelmed and allow you to conduct more in-depth research.
• Choose a researchable topic : Make sure the topic you choose is researchable and has enough literature available for you to build upon. You don’t want to select a topic that has little research available, as this will limit your ability to produce a strong paper.
• Consider your research goals : What do you hope to achieve with your research paper? Are you looking to provide a new perspective on a topic, or do you want to contribute to an ongoing debate? Your research goals can help guide you in choosing a relevant and impactful topic.
• Seek advice from your professor or mentor : If you’re still having trouble choosing a research paper topic, don’t hesitate to seek advice from your professor or mentor. They can provide valuable insights and point you in the direction of relevant literature.

In summary, choosing an economics research paper topic requires careful consideration and planning. By reading widely, narrowing your focus, and considering your audience and research goals, you can select a topic that is both interesting and impactful. Remember to seek advice from your professor or mentor if you need help along the way.

How to Write an Economics Research Paper

A well-written economics research paper should be clear, concise, and well-organized. Here are some general tips on how to write an economics research paper:

• Choose a good topic : Select a topic that is interesting and relevant to your area of study. Conduct preliminary research to ensure that you have enough information to support your arguments.
• Develop a thesis statement : Your thesis statement should be a clear and concise statement that summarizes the main point of your paper.
• Gather information : Conduct research using reliable sources such as academic journals, books, and government publications. Take detailed notes and organize them according to your outline.
• Create an outline : An outline is a roadmap for your paper that helps you organize your thoughts and arguments. Your outline should include an introduction, main points, and a conclusion.
• Write the paper : Use your outline to write your paper. Start with an introduction that grabs the reader’s attention and includes your thesis statement. The body of your paper should include your main arguments, supported by evidence and examples. End with a conclusion that summarizes your main points and restates your thesis statement.
• Edit and proofread : After you have completed your paper, read through it carefully to check for errors in grammar, spelling, and punctuation. Make sure that your arguments are well-supported and that your paper flows logically.
• Cite your sources : Be sure to cite all sources used in your paper using the appropriate citation style. This helps to avoid plagiarism and gives credit to the original authors of the ideas you are using.

By following these steps, you can create a well-written and effective economics research paper. Remember to take your time and be thorough in your research and writing, and always seek feedback from your instructor or peers to improve your work.

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When you work with us, you can expect the following features:

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Circular economy introduction

What is a circular economy?

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• Circular economy explained

The circular economy is a system where materials never become waste and nature is regenerated. In a circular economy, products and materials are kept in circulation through processes like maintenance, reuse, refurbishment, remanufacture, recycling, and composting. The circular economy tackles climate change and other global challenges, like biodiversity loss, waste, and pollution, by decoupling economic activity from the consumption of finite resources.

The circular economy is based on three principles, driven by design:

Eliminate waste and pollution.

Circulate products and materials (at their highest value)

Regenerate nature

In our current economy, we take materials from the Earth, make products from them, and eventually throw them away as waste – the process is linear. In a circular economy, by contrast, we stop waste being produced in the first place.

We must transform every element of our take-make-waste system: how we manage resources, how we make and use products, and what we do with the materials afterwards. Only then can we create a thriving circular economy that can benefit everyone within the limits of our planet.

A way to transform our system

What will it take to transform our throwaway economy into one where waste is eliminated, resources are circulated, and nature is regenerated?

The circular economy gives us the tools to tackle climate change and biodiversity loss together, while addressing important social needs.

It gives us the power to grow prosperity, jobs, and resilience while cutting greenhouse gas emissions, waste, and pollution.

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A circular economy is based on three principles, all driven by design.

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Apeel is a layer of edible, plant-based coating applied to fresh products that mimics and enhances the natural defences of fruit and vegetables. This slows down the two main things that cause spoilage – water loss and oxidation.

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Biodiversity and the circular economy

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Plastics and the circular economy

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Government and policy for a circular economy

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Education and learning towards a circular economy

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News and updates from The Ellen MacArthur Foundation

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Cities as Engines of Opportunities: Evidence from Brazil

Are developing-world cities engines of opportunities for low-wage earners? In this study, we track a cohort of young low-income workers in Brazil for thirteen years to explore the contribution of factors such as industrial structure and skill segregation on upward income mobility. We find that cities in the south of Brazil are more effective engines of upward mobility than cities in the north and that these differences appear to be primarily related to the exposure of unskilled workers to skilled co-workers, which in turn reflects industry composition and complexity. Our results suggest that the positive effects of urbanization depend on the skilled and unskilled working together, a form of integration that is more prevalent in the cities of southern Brazil than in northern cities. This segregation, which can decline with specialization and the division of labor, may hinder the ability of Brazil's northern cities to offer more opportunities for escaping poverty.

We acknowledge the support of Cristian Jara-Figueroa in the initial conceptualization of the empirical strategy. Barza and Viarengo gratefully acknowledges the financial support received from the Swiss National Science Foundation (Principal Investigator: Prof. Dr. Martina Viarengo; Research Grant n. 100018-176454). Hidalgo acknowledges the support of the Agence Nationale de la Recherche grant number ANR-19-P3IA-0004, the 101086712-LearnData-HORIZON-WIDERA-2022-TALENTS-01 financed by European Research Executive Agency (REA) (https://cordis.europa.eu/project/id/101086712), IAST funding from the French National Research Agency (ANR) under grant ANR-17-EURE-0010 (Investissements d'Avenir program), and the European Lighthouse of AI for Sustainability [grant number 101120237-HOR-IZON-CL4-2022-HUMAN-02]. The usual caveats apply. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

I have received speaking fees from organizations that organize members that invest in real estate markets, including the National Association of Real Estate Investment Managers, the Pension Real Estate Association and the Association for International Real Estate Investors.

MARC RIS BibTeΧ

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Research Priorities and Opportunities in United States Wholesale Electricity Markets

• Strategic Energy Analysis Center
• Energy Systems Integration
• Argonne National Laboratory
• Electric Power Research Institute
• Lawrence Berkeley National Laboratory
• Johns Hopkins University

Research output : NREL › Technical Report

NREL Publication Number

• NREL/TP-6A20-77521
• emerging technology
• price formation
• reliability services
• research priority
• resource adequacy
• transmission expansion planning
• transmission-distribution coordination
• wholesale electricity market

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• 10.2172/1785331
• https://www.nrel.gov/docs/fy21osti/77521.pdf

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• Power Engineering Engineering 100%
• System Operator Engineering 50%
• Independent System Operator Engineering 50%
• Regional Transmission Organization Engineering 50%

T1 - Research Priorities and Opportunities in United States Wholesale Electricity Markets

AU - Sun, Yinong

AU - Frew, Bethany

AU - Levin, Todd

AU - Hytowitz, Robin

AU - Kwon, Jonghwan

AU - Mills, Andrew

AU - Xu, Qingyu

AU - Heidarifar, Majid

AU - Singhal, Nikita

AU - de Mello, Phillip

AU - Ela, Erik

AU - Botterud, Audun

AU - Zhou, Zhi

AU - Hobbs, Ben

AU - Crespo Montanes, Cristina

N2 - The ongoing transformation of the power system presents numerous technical, economic, implementation, and policy challenges for power system operators. To help address these challenges, a collaboration between five research institutions has been established to provide technical assistance to the seven U.S. Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs). The three-year project aims to leverage the advanced methods, tools, datasets and resources of the collaborators to provide robust analytical support to address high priority market challenges that will be faced in the 2-10 year time horizon. This report, which is the first product of this collaboration, details six high-level topic areas related to challenges associated with wholesale electricity market design.

AB - The ongoing transformation of the power system presents numerous technical, economic, implementation, and policy challenges for power system operators. To help address these challenges, a collaboration between five research institutions has been established to provide technical assistance to the seven U.S. Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs). The three-year project aims to leverage the advanced methods, tools, datasets and resources of the collaborators to provide robust analytical support to address high priority market challenges that will be faced in the 2-10 year time horizon. This report, which is the first product of this collaboration, details six high-level topic areas related to challenges associated with wholesale electricity market design.

KW - emerging technology

KW - price formation

KW - reliability services

KW - research priority

KW - resource adequacy

KW - transmission expansion planning

KW - transmission-distribution coordination

KW - wholesale electricity market

U2 - 10.2172/1785331

DO - 10.2172/1785331

M3 - Technical Report

Economics for Disaster Prevention and Preparedness in Europe

Europe is facing overwhelming losses and destruction from climate-related disasters. From 1980 to 2022, weather and climate-related events across the EU caused total losses of about €650 billion , or around €15.5 billion per year. Recent disasters, such as floods in 2022 and wildfires in 2023, have highlighted the vulnerabilities of critical infrastructure, including emergency response buildings such as fire stations, but also roads and power lines.

To guide priority investments in disaster and climate resilience and strengthen financial resilience, the report series  Economics for Disaster Prevention and Preparedness —developed by the World Bank and the European Commission—offers evidence and tools to help countries take a more strategic approach to boost their climate resilience. These approaches are also being promoted and operationalized through the ongoing Technical Assistance Financing Facility for Disaster Prevention and Preparedness (TAFF) ,  funded by the European Commission, and implemented by the World Bank and the Global Facility for Disaster Reduction and Recovery ( GFDRR ).

From Data to Decisions: Tools for making smart investments in prevention and preparedness in Europe

Half of EU Member States have fire stations located in areas with high levels of multiple hazards including wildfires, landslides, floods, or earthquakes. Investing in disaster resilience makes economic sense , and there is an urgency to scale up investments in disaster and climate resilience in a cost-effective and smart manner. This report provides guidance and examples on how to make focused and smart investments to increase the disaster and climate resilience of critical sectors, including those that provide emergency-response services. Risk data, analytical tools, and examples can guide decision-making toward high-priority areas and enable a strategic approach that maximizes benefits of investing in resilience.

Investing in Resilience: Climate adaptation costing in a changing world

The report provides new insights into the costs for a country to adapt to the impacts of climate change, new costing approaches, and best practices with estimated ranges for various sectors and multiple risks. While the estimated cost of climate adaptation varies significantly, in the EU, climate change adaptation costs up to the 2030s are estimated(based on extrapolation from national studies) to be between €15 billion to €64 billion. As Europe grapples with the escalating risks of climate change , the urgency to develop 'adaptation pathways' is paramount. These decision-making approaches enable countries to prepare and act amidst uncertainty, informed by current and future climate risks.

Financially Prepared: The case for pre-positioned finance

Floods, earthquakes, landslides and storms, wildfires and droughts, extreme heat risks create additional pressure on already constrained response and recovery budgets. The size of a potential funding gap due to major earthquakes and floods varies between €13 billion to €50 billion . Should a drought or a wildfire happen in a year where a major earthquake or flood has already occurred, there would be no funding available at the EU level to respond to a wildfire or drought event. Countries in Europe need to enhance their financial resilience through better data utilization and innovative financial instruments, including risk transfer to the private sector.

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• Frontiers in Earth Science
• Geoinformatics
• Research Topics

Applications of Remote Sensing Over Plateau Mountainous Areas

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Plateau mountainous areas occupy about one fifth of the Earth’s surface, they are home to approximately one tenth of the global population, and provide goods and services to about half of humanity. Plateau mountain environments are essential to the survival of the global ecosystem. Many of them are experiencing degradation in terms of accelerated soil erosion, landslides, and rapid loss of habitat and genetic diversity. Compared with other landscapes, plateau mountainous areas are increasingly threatened by climate warming, posing a threat to future water security, biodiversity, and sustainable development. For example, climate warming poses an increased threat of natural hazards from the mountain cryosphere, such as glacial lake outburst floods (GLOFs), avalanches, slope failures, debris flows, or a combination of one or more hazards in a cascading chain. Other degradations also greatly threaten the plentiful ecosystem services provided by plateau mountainous areas. Given the significance of the mountain eco-environment, it is imperative to be able to track its rapid change, with the goal of being able to develop predictive capacity. Hence, proper management of mountain resources and socio-economic development of the people deserves immediate action. This Research Topic aims to collect the current development of remote sensing applications for the monitoring of plateau mountainous areas. Remote sensing has advanced rapidly in recent years, both in the physical hardware of the sensors and in the algorithms or methodologies used to subsequently process the data. However, the challenges associated with imaging areas of high relief are great, due to the strong topographic effect, frequent cloud over, terrain shadowing, and limited ground observation. Meanwhile, the highly dynamic environment of mountain area further brocks the application of remote sensing for mountain areas. Topics can include but are not limited to: • Mountain Hazards Remote Sensing Identification and Monitoring Techniques; • Quantitative Remote Sensing Retrieval and Modeling in Plateau Mountain Areas; • Remote Sensing Applications in Plateau Lakes; • Application of Remote Sensing in High-altitude Agriculture.

Keywords : Plateau Mountain Areas, Remote Sensing Applications, Mountain disaster and hazards monitoring, Plateau Lakes, High-altitude Agriculture

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UCLA Graduate Student Huihuang Zhu is the 2024 recipient of the Treiman Fellowship

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IMF's Gita Gopinath: Geopolitics and its impact on global trade and the dollar

Gita Gopinath traveled to Stanford on May 7 to do what policy leaders often do: meet with students and faculty and offer their perspective on the world today. For the first deputy managing director of the International Monetary Fund (IMF), the impact from shifts in geopolitics was the topic du jour.

Speaking at an event hosted by the Stanford Institute for Economic Policy Research (SIEPR) in collaboration with the Stanford King Center on Global Development and the Hoover Institution, Gopinath talked about the outlook for the global economy and the U.S. dollar as trade among the world’s largest countries splinters along political lines. The good news, she said, is the level of risks facing the world economy today is lower than it has been “in a very long time.” The bad news? Trade among “geopolitically distant” countries is declining at rates, she said, not seen since the start of the Cold War more than 75 years ago. Trade fragmentation and protectionist economic policies, she said, could be dangerous. “A very serious decoupling scenario could cost up to 7 percent of [global] GDP,” Gopinath said in calling on countries to, among other steps, strengthen the World Trade Organization, keep open lines of communication, and focus on common interests like climate change.

John Taylor, a senior fellow at SIEPR and the Hoover Institution, asks about inflation targets during the Q&A portion of the May 7 event.

Gita Gopinath meets with Stanford scholars who are delving into global policy issues ranging from central banks to trade.

Chenzi Xu, a SIEPR faculty fellow; Ross Levine, a senior fellow at Hoover; and Steven Davis, a senior fellow at SIEPR and Hoover, are among the scholars who met with Gita Gopinath of the IMF.

Graduate students in public policy and economics as well as predoctoral and postdoctoral research fellows at Stanford experience a special opportunity to engage with a top IMF official in their meeting with Gita Gopinath.

All photos by Ryan Zhang.

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Twenty Key Challenges in Environmental and Resource Economics

Lucas bretschger.

1 CER-ETH Centre of Economic Research at ETH Zurich, ZUE F7, 8092 Zurich, Switzerland

Karen Pittel

2 ifo Center for Energy, Climate and Resources, ifo Institute and LMU Munich, Munich, Germany

Economic and ecological systems are closely interlinked at a global and a regional level, offering a broad variety of important research topics in environmental and resource economics. The successful identification of key challenges for current and future research supports development of novel theories, empirical applications, and appropriate policy designs. It allows establishing a future-oriented research agenda whose ultimate goal is an efficient, equitable, and sustainable use of natural resources. Based on a normative foundation, the paper aims to identify fundamental topics, current trends, and major research gaps to motivate further development of academic work in the field.

Introduction

Research frontier.

The research agenda in environmental and resource economics has always been very broad and dynamic, reflecting the ways our economies interact with the natural environment. While in classical economics of the eighteenth century the factor land played a dominant role, the effects of pollution externalities, resource scarcities, ecosystem services, and sustainability became important in subsequent time periods. These issues have triggered different waves of research with very prominent results, specifically on optimal policies in the presence of externalities (Pigou 1920 ), optimal extraction of non-renewable resources (Hotelling 1931 ), optimal capital accumulation in the presence of resource scarcities (Dasgupta and Heal 1974 ), and sustainable development (Hartwick 1977 ; Pearce et al. 1994 ). Of course, the list of topics has already been very diverse in the past but has increasingly become so with recent global environmental problems challenging the functioning of a world economy which is growing at a high rate and heavily relies on an international division of labour and trade.

In the past, new research challenges emerged and manifested in different ways: Some topical fields became increasingly relevant due to new technological developments, new ecological or societal challenges or new political agendas. Others arose in fields that were already well researched but rose in importance. Not all challenges were of a topical nature. In some fields, we found our methodological tool-kit not equipped to deal with new problems or in need of extension to find new (and better) answers to old questions. At the same time, it has become increasingly clear that we have to reach out to other disciplines to meet new and often immense challenges. In environmental economics it is key to seek a good balance between disciplinary excellence, interdisciplinary collaboration, and political impact.

Environmental and resource economics is a dynamic field, in which new key topics emerge frequently. So, while the topical and methodological challenges that the paper identifies will be important for some time to come, they will and should also be subject to further development over the next years and decades. The paper aims to identify and address the variety of new complex problems generated by humans when they exploit natural resources and the environment. We specifically identify Twenty Challenges that we feel will be important for environmental and resource economists to address. We are aware that such a list will never be unanimously agreed upon and we do not even lay claim on the list being complete; the next section provides a background to the compilation of the list. Nevertheless, we feel it to be important to (at best) point researchers in directions important to work in in the future or (at least) to launch a new—controversial but productive—discussion on the development of our field. In any case, the paper should support the profession to operate at the research frontier generating novel theories, empirical designs, and workable policies. But, before we turn to the Twenty Challenges , we aim to motivate the framing of research in our field—past, present and future.

Identification of Research Challenges

To provide a normative foundation for our research agenda we characterize our underlying assumptions and generalized views on the nature of research in the field. This set of basic assumptions motivates the criteria of importance, activeness, and distinction of the selected topics as well as our choices with respect to design, methodology and research methods. Identifying the relevant issues, i.e. the mere choice of what to study in environmental economics imposes specific values on the subjects. In our view, the guiding principle in the normative framework is that environmental economics differs from general economics by its ontology, i.e. the system of belief that reflects the interpretation of what constitutes an important fact. It is a deep and serious concern about the state of the natural environment that drives the economic analysis of ecological processes. Nature is not simply part of the economic system but a different system with its own very complex regularities and dynamics; ecosystem values are not reducible to market exchange values. The task to integrate the ecological and economic systems to a holistic framework in an appropriate manner and to derive valid guidelines for the economy under the restrictions imposed by the environment lies at the heart of our research. Central parts of the ontology are the valuation of ecosystems, the increasing scarcities in natural resources and sinks, the effects of environmental externalities, the long-term orientation of planning, an important role of uncertainty, and the existence of irreversible processes. The anthropocentric view and the use of utilitarianism do not imply that individuals are purely self-centered and narrowly selfish. It highlights the indistinguishable role of human decision making for the future of the planet and aims at decision making that cares for efficiency, equity, and posterity. Based on a broad utilitarian setup, growth is not valued in terms of material consumption but in terms of wellbeing, which includes elements like social preferences, work-life balance, appreciation of nature etc. Posterity reflects our care for future generations, whose welfare should not be harmed by the activities of current generations. Fundamental changes of the economy e.g. the phase-out of fossil fuels, includes policy-induced decrease of activities, a role for technology, substitutability in production and consumption, a decoupling from natural resource use, and internalizing cost to correct market failures. Substantive transitions are very difficult to implement, as important lock-in mechanisms such as habit persistence, built infrastructure, and supporting policies such as subsidies stabilize current practices. To achieve a change of mindset in politics to achieve a transition to a green economy is a difficult task. A fundamental systems change, as discussed by many these days, is undoubtedly much more complex to accomplish; its impacts are uncertain and may delay the necessary steps which are important to rapidly improve the state of our ecosystems.

We acknowledge that one can always challenge an ontological position because it reflects ethical principles. In our research agenda there is no external reality, independent of what we may think or understand it to be. We reduce economic and ecological complexity through our personal system of belief to design our preferred map, which by definition is not the territory. In his survey of ecological research issues for the economists, Ehrlich ( 2008 ) refers to his ”own mental meta-analysis” to motivate his choices and to alert us to the importance of research on big issues like the meaning of life, mortality, and death. At the same time, he acknowledges that the emergence of pervasive new environmental problems, such as climate change and biodiversity loss, requires to flexibly adjust research programs to societal demand. Adjustments of the agenda may also be supply driven, when new methods allow for more effective engagement with important issues like risk and uncertainty or assessment of empirical regularities with superior estimation methods.

Forming a Research Agenda

Environmental economics is closely linked to general economics in its epistemology, i.e. the validity, scope and methods of acquiring knowledge by using models, distinguishing between positive and normative models, and testing hypotheses with empirical methods and experiments. An important cornerstone for economic research has always been the analysis of economic efficiency. Since the early days of environmental economics research, this has also held for our field whether it concerned the efficiency in the use of natural resources or the design of policies. Although research in our field has become much more interdisciplinary and policy-oriented, this still constitutes common ground. It is still a prime duty of the economist to point at the potentially vast allocative inefficiencies of the use of natural resources in pure market economies. Efficiency is a necessary condition for optimal states of the economic-ecological system and the foundation for policies maximizing social welfare.

The pursuit of optimality has to be complemented by a requirement to take care of equity and posterity enabling sustainability of development. In this long-run perspective, economics has to highlight the substitution effect as a powerful mechanism establishing consistency between humanity and its natural environment. Substitution comes in many guises, e.g. as substitution between clean and dirty production, renewable and exhaustible resources, extractive and conservationist attitude, pollution intensive and extensive consumption, etc. This dynamic analysis is crucial in many respects. It has recently been included at all levels of research in the fields. The same holds for the issue of risk and uncertainty, a pervasive topic when dealing with the environment.

In many cases, there has been a significant discrepancy between the theoretical derivation of social optima in academia and the attempts to foster their implementation under realistic policy conditions. As a consequence, policies dealing with environmental issues have been of very different quality and effectiveness. The reduction of acid rains, the protection of the ozone layer, and cutbacks of particulate matter emissions in many world regions were among the prominent successes. Global warming, extraction of rare earth elements, and loss of biodiversity are not yet addressed in a comprehensive manner. Political resistance against the protection of nature often refers to the economic costs of policies, including the concerns of growth reduction, employment loss, and adverse effect on income distribution. The lack of success in many policy areas has led to reformulation and extension of the research agenda. In the future, research should focus more on strengthening the links between theory and policy.

Our selection of the Twenty Challenges is also based on the potential of research in these areas to contribute and leverage social welfare and sustainable development. We specifically look for areas that are either inherently new to the research agenda in environmental and resource economics or in which research stagnates. We present the challenges in a specific order and like to highlight the links between them before we enter into the details. The aim of net zero carbon emission by the mid of the century dominates current policy debates and unites basically all important elements of our discipline; it thus constitutes a good starting point. Decarbonization necessarily involves a deep understanding of systems dynamics and of risk and resilience, which are presented next. An important and not sufficiently addressed research issue is the emergence of disruptive development during a substantive transition, the next challenge for our research. Extending the scope, we then address human and government behaviour. In the context of environmental policy, the popular and sometimes underrated request of an equitable use of the environment has emerged as a dominant topic, a next issue for further research. As natural capital involves many more elements than the climate, biodiversity and general ecosystem services are included in the sequence. Broadening the scope to the big problems of human behaviour with natural resources we then turn to political conflicts, population development and conflicting land use. Shifting the focus on induced movements of the labour force we go on by dealing with environmental migration and urbanization. These affect welfare of the individuals in a major way, like health and the epidemiological environment as a next research challenge. In terms of the reorganization of the transition to a green economy we highlight the central role of finance and the implementation of new measures in the dominant energy sector. The final three research challenges are motivated by advances in the methodology. Big data and machine learning offer new perspectives in sustainability research, refined methods and increasing experience improve our simulation models and structural assessment modelling, which forms the last three challenges of our list.

Links to Current Research

In order to put our agenda into a broader perspective and to concretize the selected challenges, we believe it is important to show the relationship between our research agenda and the priorities in current literature and policy debates. We have considered three main links. First, we conducted a quantitative and qualitative literature review and analyzed current research as presented at international conferences (World Conference of Environmental and Resource Economics in 2018, the SURED conference in 2018, Meetings of the American, European, and Asian Associations of Environmental and Resource Economics in 2019). The aim of this analysis was to see where our profession moves and which of the currently hotly debated topics offers a high potential for future research. Second, we took the discussions in interdisciplinary research fora into consideration to identify further fields that are of high importance for future resource use, sustainable development and environmental outcomes but have so far not been adequately addressed from an economics perspective. Information on this research was gained through interdisciplinary research initiatives (for example The Belmont Forum, Future Earth and National Research Funding Activities). Involvement in interdisciplinary and globally oriented research councils provided further access to the discussions in other disciplines. Third, we draw conclusions from current policies and news as well as our involvement in the policy arena. The authors are involved in a number of institutionalized policy-oriented activities on the regional, national and international level (Regional Climate Councils, National Climate Policy Platforms as well as the UN climate negotiations).

The paper relates to similar contributions in recent literature. Based on citation data Auffhammer ( 2009 ) identifies important topics and scholars and provides a brief historical overview of the discipline from exhaustible and renewable resources to sustainability, pollution control, development, international trade, climate change, international agreements, and non-market valuation. Polyakov et al. ( 2018 ) analyze authorship patterns using text analysis for classification of articles in Environmental and Resource Economics. Based on 1630 articles published in the Journal from 1991 to 2015 they document the importance of applied and policy-oriented content in the field. They identify non-market valuation, recreation and amenity, and conservation, as popular topics and growing when measured by both number of articles and citations. Costanza et al. ( 2016 ) investigate the most influential publications of Ecological Economics in terms of citation counts both within the journal itself and elsewhere. Important topics turn out to be social aspects of environmental economics and policy, valuation of environmental policy, governance, technical change, happiness and poverty, and ecosystem services. A contemporary analysis of how research issues have developed in the Journal of Environmental Economics and Management in the time of its existence is provided by Kubea et al. ( 2018 ). These authors show that the sample of topics has broadened from the core issues of non-market valuation, cost-benefit analysis, natural resource economics, and environmental policy instruments to a more diversified array of research areas, with climate change and energy issues finding their way into the journal. In addition, increasing methodological plurality becomes apparent. They conclude that energy, development, and health are on the rise and that natural resources, instrument choice, and non-market valuation will endure; multidisciplinary work will be increasingly important. An excellent survey on research in the central field of sustainable development is provided in Polasky et al. ( 2019 ), which explicitly shows where the collaboration between economists and the other disciplines is currently insufficient and how it should be intensified in the future.

Regarding the literature that we connect our Twenty Challenges to, we naturally face the problem that some challenges have so far not been addressed adequately in the (economics) literature. In these cases we also reference papers from other disciplines. We, however, also take basic literature and recent research in environmental and resource economics into account. As we often deal with emerging topics, we cite some of this work even when not yet published. In other cases, where future research can build on or learn from past research, we also go back in time and reference older papers. Ultimately, neither our list of challenges nor the literature we base our analysis on will be satisfying to everybody. Our selection cannot be comprehensive and does not claim to be. But the specific task to identify future-oriented topics ultimately lasts on a subjective individual assessment of the authors. Nevertheless, hopefully it imparts impulses for future research in the different subfields of environmental and resource economics.

Twenty Challenges

The ordering of the following challenges should not be understood to perfectly reflect their individual importance (beyond what we explained in the previous sections). Also, many of the fields discussed are inherently related, creating some unavoidable overlap. We feel that efforts to bring the challenges into some complete ’natural order’ are not only doomed to fail but also would not do them justice as they relate to very different areas and can/should not be weighed against each other. Also, attempting to show their interrelations would result in a 20-by-20 matrix that would not provide more clarity.

• Deep decarbonization and climate neutrality To limit global warming to a maximum of 1.5 degrees Celsius, a state of net zero greenhouse gas emissions—i.e. climate neutrality—should be reached by the mid of the century (IPCC 2018 ). The directly following and unprecedented challenge is to decarbonize the global economy in very a narrow time window (Hainsch et al. 2018 ). This holds especially as the threshold for 1.5 degrees is expected to be passed around 2040 (IPCC 2018 ). Countries must increase their NDC ambitions of the Paris Agreement more than fivefold to achieve the 1.5 degree goal (UN - United Nations 2019 ). The time window for necessary decisions is closing fast. Infrastructure that is installed today often has a life span that reaches until and beyond 2050. Decisions on investments today therefore affect the ability to reach climate targets not only in 2030 but also 2050 and beyond. And while the necessity of reaching net zero emissions by mid century is reflected by, e.g., the European Commission’ Green Deal, much uncertainty remains regarding its implementation. This holds to an even larger extent with respect to other countries and regions. The fundamental challenge is to better understand economically viable deep decarbonization paths and then to implement incentives for input substitution, technology development, and structural change. More specifically, the vision of these policies has to be long-term and reach beyond phasing out coal and increasing energy efficiency. However, despite recent research efforts in climate economics, many issues around decarbonization, negative emissions and economic development are still controversial or insufficiently understood by economists. Specifically, industry applications for which alternative technologies are not available yet as well as agricultural emissions will have to be addressed. Also, the later greenhouse gas emissions start to fall, the faster their decline will have to ultimately be in order not to overshoot temperature targets (Agliardi and Xepapadeas 2018 ), leading to an increased need for negative emissions. However, potential trade-offs and synergies in the use of land for negative emission technologies, food production and biodiversity are still underresearched. Identifying technologies today that are the most promising in the very long run is subject to high uncertainty. Yet, while investing too early might be costly, delaying investment might cost even more or might lead to a weakening of future climate targets (Gerlagh and Michielsen 2015 ). Also, transition processes may involve strong scale effects implying nonlinear development of abatement cost. Once certain thresholds are reached, lower abatement cost or even disruptive development completely altering the production process could emerge in a later phase of decarbonization. Given the dramatic increase needed in mitigation efforts to reach the 1.5 or even 2 degree target, more attention also has to be devoted to the question of adaptation. Until today, the focus of research as well as policy has been primarily on mitigation rather than adaptation, partially because of expected substitution effects between mitigation and adaptation and partially because adaptation was taken to be automatic (Fankhauser 2017 ). However, as Fankhauser lays out “knowledge gaps, behavioral barriers, and market failures that hold back effective adaptation and require policy intervention”. All of these topics present a wide scope for substantial further research.
• Dynamics of the economic-ecological system Depletion of exhaustible resources, harvesting of renewable resources, recycling of raw materials, and accumulation of pollution stocks require basic societal decisions which are of an inherently dynamic nature. Whether the world society will be able to enjoy constant or increasing living standards under such dynamic natural constraints depends on another dynamic process, which is the accumulation of man-made capital. To derive the precise laws of motion in all the stock variables is challenging because general solutions of dynamic systems with several states are usually hard to obtain. An adequate procedure to obtain closed-form solutions may be to link several stocks in a reasonable way, e.g. when simultaneously dealing with resource, pollution, and capital stocks (Peretto 2017 ; Bretschger 2017b ). The specific challenge is then to find the best possible economic justification to motivate the links. One may also focus on a few stocks which are considered the main drivers of economic development and sustainable growth on a global scale (Marin and Vona 2019 ; Borissov et al. 2019 ). When resorting to numerical simulation methods it is a main challenge to provide basic economic results which are sufficiently robust and supported by ample economic intuition. Social-ecological systems are increasingly understood as complex adaptive systems. Essential features of these systems - such as nonlinear feedbacks, strategic interactions, individual and spatial heterogeneity, and varying time scales—pose another set of substantial challenges for modeling in a dynamic framework. A main challenge is the characterization and selection of dynamic paths with multiple equilibria and the overall tractablility of the models, given the diversity of interlinkages and nonlinear relationships. The complexity of economic-ecological systems lead to a main challenge for designing effective policies is taking account of network effects, strategic interaction, sectoral change, path dependencies, varying time lags, and nonlinear feedbacks have to be considered as well as different regional and temporal scales, interdependencies between ecosystems, institutional restrictions and distributional implications (see, e.g., Engel et al. 2008 ; Levin et al. 2013 ; Vatn 2010 ). Optimal policies should also acknowledge the balance between the preservation of the ecology and the development of the economy especially for countries growing out of poverty. Setting a price for ecosystem services and natural capital via policy is important for preventing innovation incentives from being skewed against maintaining natural capital and ecosystem services.
• Risk, uncertainty, and resilience The vast majority of contributions in environmental economics use models with a purely deterministic structure. However, large negative environmental events require a completely different framework, which poses specific challenges for modelling. Heatwaves, floods, droughts, and hurricanes are shocks that are very uncertain, arriving at irregular times and with varying intensity. Also, risk and uncertainty about socio-economic impacts and technological development affect the optimal design of policies (see, e.g., Jensen and Traeger 2014 ). Moreover, uncertainty changes the political economy of climate policy and, finally, regulatory and policy uncertainty might create obstacles to reach climate targets through, for example, distortions of investment decisions (Pommeret and Schubert 2018 ; Bretschger and Soretz 2018 ). Stern ( 2016 ) argued forcefully that climate economics research needs to better integrate risk and uncertainty. Bigger disasters or so-called ”tipping points” such as the melting of the Greenland ice sheet, the collapse of Atlantic thermohaline circulation, and the dieback of Amazon rainforest involve an even higher level of uncertainty (Lenton and Ciscar 2013 ) with implications for optimal policy design and capital accumulation (Van der Ploeg and de Zeeuw 2018 ). Understanding the implications of tipping points is further complicated as the different tipping points are not independent of each other (Cai et al. 2016 ). The Economy and the Earth system both form non-deterministic systems; combining the two in an overarching framework and adding institutions for decision making multiplies the degree of complexity for adequate modelling and methods (Athanassoglou and Xepapadeas 2012 ). It is thus a main challenge for further research to provide analytic foundations and policy rules for rational societal decision-making under the conditions of risk and uncertainty up to deep uncertainty (Brock and Xepapadeas 1903 ; Baumgärtner and Engler 2018 ). Future work on policy design under deep uncertainty can build on a wide range of literature ranging from the assessment of the precautionary principle in this context to the fundamental contributions by Hansen and Sargent ( 2001 ) and Klibanoff et al. ( 2005 ) as well as on more recent analyses in the context of environmental and resource economics, e.g. Manoussi et al. ( 2018 ). An important challenge of the environmental discipline is to provide a framework for the global economy providing the conditions for resilience against major shocks and negative environmental events (Bretschger and Vinogradova 2018 ). With deep uncertainty one has to generate rules for deep resilience. Including uncertainty is especially important when environmental events do not occur constantly but cause the crossing of tipping points involving large and sudden shifts. Economic modeling needs to increasingly incorporate tipping points and the value of resilience in theory and to generate and use data supporting the empirical validity. The combination of uncertainty and potential irreversible outcomes (e.g., species extinction) is another big challenge for research.
• Disruptive development and path dependencies Substantial and sometimes disruptive changes in behavioral patterns, economic structure and technologies will be required if net zero GHG emissions and the UN sustainable development goals are to be reached. On the bright side, development may exhibit favorable disruptions. Consumers’ preferences and political pressure coupled with new technology achievements may alter certain sectors in a short period of time. Similar to the communication industry which has completely changed, transportation and heat generation could and mst probably will undergo fundamental changes in the near future. The research challenge here is to provide adequate models predicting and adequately analyzing such important transitions and to highlight resisting forces at the same time. In fact, the change of trajectories in development is often hampered by technological, economic and behavioral lock-ins, resulting in path dependencies and inertia. In such situations, history influences current development through, for example, past investment in R&D, the size of established markets, increasing returns or habits acquired (Aghion et al. 2016 ; Barnes et al. 2004 ; Arthur 1989 ). Behavioral path dependencies affect acceptance and adoption of new technologies, hinder social innovation and might render policies aimed at marginal changes ineffective. They can thus postpone the transition to a low-carbon economy, harm efforts in biodiversity conservation and prolong unsustainable resource use patterns and lifestyles, even if they are welfare enhancing in the long-run (e.g. Acemoglu et al. 2012 ; Kalkuhl et al. 2012 ). Inertia and lock-ins may also be policy driven with, for example, political or economics elites trying to block change (Acemoglu and Robinson 2006 ) or clean energy support schemes fostering new technology lock-ins. Whether disruption or a lock-in emerges depends, for example, on expectations determining the steady state of an economy (Bretschger and Schaefer 2017 ). This requires nonlinearities e.g. in capital return, generating overlap regions in which the growth path is indeterminate and could be either driven by history or by expectations. The challenge is to add more substantial research into system dynamics and the political economy of change, to gain a better understanding of the different mechanisms responsible for inertia and disruptive change. So far, the role of path dependencies has often been neglected in empirical as well as theoretical analyses (Calel and Dechezlepretre 2016 ). Also, understanding the triggers or tipping points for disruptive change can help to identify policies that have a big environmental impact with moderate costs in terms of environmental policy.
• Behavioral environmental economics Traditionally, economics focuses predominantly on the supply side when analyzing potentials and challenges for environmental policies. Preferences of individuals are mostly assumed to be given with economic analysis confining itself to studying the effects of changing incentives and altering constraints. The change and development of preferences over time plays only a comparative minor role for economic research. Also, the follow-up question whether policies should be allowed to tamper with preferences is rarely discussed with nudging being one big exception to this rule (e.g. Strassheim and Beck 2019 ). While the traditional, supply-side oriented analysis has provided powerful results in positive analysis, it proves to be limited in a field which inherently includes normative conclusions like environmental economics. The path toward sustainable development requires behavioral changes and political actions changing our relationship to the environment. Ultimately, environmental policies have to be decided by the same people overusing the environment in the absence of a policy. In situations where outcomes are inefficient because individuals and political actors follow their own self-interest and ignore external costs and benefits of their actions, it is clearly not sufficient for economists to advocate the implementation of environmental policies. It is crucial to understand under what conditions preferences change and agents support green policies (Casari and Luini 2009 ). So, the challenge to economic research is to better understand the evolution of green attitudes, the emergence of preferences for a clean environment, and expectations in the case of multiple equilibria (Cerda Planas 2018 ). The formation and development of preferences is also not independent from cultural, regional and community aspects. Research that ignores heterogeneity among actors or the role of social and group dynamics and only relies on the traditional, isolated analysis of individual preferences is likely to lead to an incomplete understanding of preference dynamics. As the example of discounting shows, the social context has an impact on myopic attitudes and the motivation to undertake sacrifices for a cleaner future (Galor and Özak 2016 ). Also, attention to behavioral details, that economists might find rather uninteresting from a research perspective, might influence effectiveness of policies tremendously (Duflo 2017 ). Especially with the natural environment, the choice and guise of policy instruments should take these mechanisms into account.
• Institutional analysis of environmental policy Virtually every contribution to the environmental and resource economics literature culminates in one or several policy conclusions. However, these results are often received with skepticism from industry and public. Therefore, a continuing key challenge for our profession is a thorough understanding of environmental policy institutions, processes and decision-making; this task has become even more important given the enormous scale and global nature of future policies. Research in this area has, however, the advantage of already looking back on a long tradition (see e.g. the body of work by Daniel Bromley, e.g. Bromley 1989 ). Well-designed institutions support and create incentives to drive development toward a welfare-improving state. Absent, weak, inefficient, or even corrupt governments and institutions are detrimental to successful environmental policy (Pellegrini and Gerlagh 2008 ; Dasgupta and De Cian 2016 ) or might lead to detrimental effects of resource wealth (see Badeeb et al. 2017 for an overview of the related literature). To effectively increase social welfare by, for example, conservation of ecological services, one has to design policies in a way that allow implementation under realistic policy conditions (Rodrik 2008 ). Pure reference to the construct of a social planner is not sufficient. For increasing efficiency in problem solving, the ex-post evaluation of policies has to be expanded and improved. Policy evaluation should not only analyze if regulatory objectives have been reached but also which side-effects arise (OECD 2017 ). Moreover, the comparison with alternative measures and a continuous international exchange of best practices have to be supported by science. A proactive environmental policy analysis should furthermore include studying vested interests, lobbying, political power, policy communication, and voting behavior. Especially insights from behavioral economics may add to our understanding of a proper design of environmental institutions. On the international level, the adequate institutional design for global environmental policy still poses great challenges. Beyond traditional research fields like international environmental agreements in specific areas like climate change, the multi-dimensionality of the sustainable development goals (SDGs) and potential trade-offs between different goals need to be explored further. This holds especially given the vast differences in income, vulnerability, and resilience between countries, as well as the need for unanimity and voluntary contributions on the UN level. Relating national to international policies has the potential to be especially rewarding in this context given the SDGs relevance for and acceptance in national as well as international politics. Insights from the analysis of institutions in traditional economic sectors (e.g. on the efficiency of capital markets) should be transferred and applied to the global level (e.g. with respect to investment in the world’s natural capital stock).
• Equitable use of the environment We place equity and fairness in dealing with the natural environment on the priority list of our challenges because first and foremost equity is a central requirement for sustainability of development. By definition, sustainable development seeks an equitable treatment across different generations as well as agents living today. We also believe that for successful environmental policies, equity and fairness are crucial complements to the dominant efficiency requirement (Sterner 2011 ). It is a specific challenge of our field to study equity in an economic context and to demonstrate its importance for sustainability to mainstream economics and the public. The first aspect of the problem is the aforementioned unequal vulnerability of countries to environmental changes such as global warming. If vulnerability is higher in less developed countries, the equity perspective is especially striking. As a matter of fact, most of the climate vulnerable countries have a low average income. Global environmental policy is then motivated not only by efficiency but also by the aim of preventing increasing inequalities (Bretschger 2017a ). Global efforts are also indicated to avoid adverse feedback effects of induced inequalities like environmental migration. The second aspect is that acceptance of public policies sharply increases with the perceived fairness of the measure (Pittel and Rübbelke 2011 ; IPCC 2018 ). In the past, economists have often underestimated political resistance against efficient environmental protection, which was mostly related to negative impacts on income distribution. Take carbon pricing and emission regulation as a current example. Although evidence from cross-country studies suggests that regressivity of carbon pricing is much less frequent than often assumed in the public (Parry 2015 ), the perceived distributional impact is often very different (Beck et al. 2016 ). Therefore the impact of environmental policies on income groups, regions, and countries should be better integrated in our analysis and policy recommendations. Where efficient policies are regressive, economists have to evaluate and propose alternative or complementary policy designs. Benefits and costs need to be disaggregated by group (country) with a special attention on the poorest members of society (countries). Internationally, equity concerns need to be addressed especially in situations where the entire world benefits from the protection of natural capital and ecosystem services in poor countries (e.g., of carbon sinks and biodiversity hubs like tropical rain forests). The experience with the REDD+ process shows the complexity of designing such international approaches to incentivize and enable developing countries to protect these global public goods. More economic analysis is needed on all of the above aspects, giving rise to a rich research agenda in theory and applied work.
• Loss of biodiversity and natural capital The rate of species extinction today is estimated to be up to 1000 times higher than without human interference (Rockstrom 2009 ). Human activities impact biodiversity through land use change, pollution, habit fragmentation and the introduction of non-native species but also increasingly through climate change and its interaction with already existing drivers of biodiversity change (IPCC 2002 ). In view of this, biodiversity conservation has long been a focus of politics. In 1992, the United Nations Convention on Biological Diversity main objectives were stated as ”the conservation of biological diversity, the sustainable use of its components and the fair and equitable sharing of the benefits arising out of the utilization of genetic resources” (UN - United Nations 1992 ). Yet, although economists have developed conceptual and theoretical frameworks addressing the valuation of biodiversity (Weitzman 1998 ; Brock and Xepapadeas 2003 ) and despite data on valuation having become increasingly available (see, e.g. TEEB 2020 ), Weitzman ( 2014 ) points out, that an objective or even widely agreed measure of biodiversity and its value is still missing. The same holds for an underlying theory framework and a comprehensive measure of natural capital that not only includes biodiversity but also its links to regulating services (e.g., pollution abatement, land protection), material provisioning services (e.g., food, energy, materials), and nonmaterial services (e.g., aesthetics, experience, learning, physical and mental health, recreation). How biodiversity and natural capital should be measured, which societal, political and economic values underlie different measures and valuation and how ecological and economical trade-offs should be dealt with are big challenges left for future research. In order to address these issues, not only do we need to develop appropriate assessment methods, but we also need to disclose the theoretical basics of this assessment and which trade-offs go hand in hand with different assessments (Brei et al. 2020 ; Antoci et al. 2019 ; Drupp 2018 ). Completely new issues for the valuation of biodiversity and natural capital arise with the development of new technologies. Take DSI (digital sequence information), for example. DSI are digital images of genetic resources (DNA) that can be stored in databases. This gives rise not only to new challenges regarding their valuation but also about the fair and equitable sharing of the benefits arising out of the utilization of these resources.
• Valuing and paying for ecosystem services Related to the question of biodiversity valuation is the market and non-market valuation of ecosystem services in general and the adequate design of payment for ecosystem services (PES). Overall, research on ecosystem services valuation has made significant progress in the last decades. Nevertheless, challenges remain even in traditional valuation fields (for example, valuation of non-use or interconnected ecosystems). Other, so far underresearched areas that constitute promising fields for future research are health-related valuation aspects (Bratman et al. 2019 ) and nonmaterial ecosystem services, such as amenities of landscapes or cultural ecosystem services (Small et al. 2017 ; James 2015 ). Also, data availability remains a problem in many valuation areas. Although digitized observation and information systems offer large potentials for previously unknown data access, they also raise a whole slew of new ethical, privacy as well as economic questions, especially in areas like health. While a lot of progress has been made in the valuation of ecosystem services, their impact on decision making still lags behind. One factor contributing to this disconnect are prevalent mismatches between regional and temporal scales of economic, institutional and ecological systems that make valuation and policy design complex (Schirpke et al. 2019 ). The challenge is to develop combined natural science-economic models that allow better insights into how changes in economic systems lead to changes in the flows of ecosystem services and vice versa (Verburg et al. 2016 ). This requires a deep understanding of ecological and economic systems as well as other aspects like technologies, regional heterogeneity and system boundaries, i.e. catastrophic events. It also raises classic economic problems, such as choosing an appropriate discount rate and degree of risk aversion. Regarding tools to include ecosystem services in economic decision making, PES are a, by now, well-established (Salzman et al. 2018 ) and also quite well-researched approach for promoting environmental outcomes. Still, the literature has identified a number of aspects to be addressed in the design of PES to make them more effective as well as efficient and to simultaneously improve social outcomes (Wunder et al. 2018 ; Chan et al. 2017 ). A promising area of research rarely addressed are PES to preserve transboundary or global ecosystem services through international payment schemes (for example, in tropical forest preservation). While some work has been done on the conceptual level (e.g. Harstad 2012 ), the REDD+ process (Maniatis et al. 2019 ) and the failure of the Yasuni initiative (Sovacool and Scarpaci 2016 ) show the complexity of such approaches for which a thorough economics analysis is still missing.
• Conflicts over natural resources Climate change and decarbonization transform regional and global geopolitical landscapes and might give rise to future domestic as well as international conflicts (Mach et al. 2019 ; Carleton and Hsiang 2016 ). First, decarbonization changes the role of resources and of resource- and energy-related infrastructures. Climate policies affect the rent allocation between different fossil fuels like, for example, coal and natural gas, but might also change the overall rent level (Kalkuhl and Brecha 2013 ). Asset stranding can endanger stability in resource (rent) dependent countries. Conflicts may also arise over materials critical to new, low-carbon energy technologies like rare earth elements but also over access to sustainable energy (Goldthau et al. 2019 ; O’Sullivan et al. 2017 ). Further research is needed to design policies that are better equipped to reduce the vulnerability of economies to changes in resource availability and resource rents. This opens up challenges for future research, especially as restrictions from very diverse institutional capacities have to be considered to render policies efficient and effective. Second, climate change will affect the ability to meet basic human needs through food, land and water. Sulemanaa et al. ( 2019 ) find a positive effect of the occurrence of temperature extremes on conflict incidence. They stress the need for more advanced spatial econometric models to identify effects that are transmitted across space. More research is also needed on the role of institutions and interaction with other phenomena like population dynamics, migration, and environmental degradation. Currently, the role of climate for conflict is still small compared to other causes, many linkages between conflicts and climate change as well as other factors promoting conflict are still uncertain (Mach et al. 2019 ). The challenge to economic research is to get early insights into the nexus of historical and cultural factors, vested interests, population dynamics and climate change in order to help to prevent resource-related conflicts.
• Population development and use of the environment Already since antiquity, demographic analysis has been a central topic of human thinking. With the Malthusian predictions of catastrophes caused by population growth, the topic is firmly related to the natural environment and the limits of planet Earth. While limited food production was the dominant topic in the 18th century, the impact of world population on global commons, availability of renewable and exhaustible resources, and ecosystem services have been dominant topics in the last decades. Still, while it is often argued in the public and in natural sciences that world population size should be a concern because of ecological constraints, economics has largely left the topic on the side; the few exceptions (Peretto and Valente 2015 ) and (Bretschger 2013 , 2020 ) point in a different direction, namely the compatibility of population growth and sustainable development under very general conditions. Current trends of demographic transition show significant signs of population degrowth for leading economies while trends for developing countries vary substantially (UN - United Nations 2019 ). Population is forecasted to expand especially in Africa, accounting for more than half of the world’s population growth over the coming decades, raising questions about the effect of this population increase on fragile ecosystems, resource use and ultimately the potential for sustainable growth (African Development Bank 2015 ). Population growth will also promote further urbanization and migration triggered by environmental and resource depletion but also giving rise to new environmental problems (Awumbila 2017 ). Challenges from population development and environment are thus closely linked to the other research topics highlighted in this article. However, population growth is not exogenously given but determined by economic, social as well as environmental factors. Education and income or economic development have long been established as crucial for fertility (see e.g. the reviews of the literature provided by Kan and Lee 2018 ; Fox et al. 2019 ). To integrate these findings into a holistic approach is a mediating challenge for future research. Climate change might affect these channels in different ways, potentially exacerbating global inequality (Casey et al. 2019 ). However, population development, fertility, and mortality are not only affected by climate change but also by other environmental stresses like air pollution (Conforti et al. 2018 ). A successful combination of endogenous fertility and mortality with natural resource scarcity, agricultural production, and pollution accumulation as well as capital and knowledge build-up in a comprehensive framework is a respectable challenge for an economic modeller; we suggest that in the future it should be considered by economists more intensively.
• Land use and soil degradation The terrestrial biosphere with its products, functions and ecosystem services is the foundation of human existence, not only for food security but far beyond. Currently, about a quarter of ice-free land area is degraded by human impacts (IPCC 2019 ). The optimal use of scarce land resources becomes an even more urgent topic in the face of the biodiversity crisis and the onset of climate change. This holds especially as the physical and economic access to sufficient, safe and nutritious food is the basic precondition for human existence. Climate change challenges this access on different levels. On the one hand, climate change increases the pressure on productive land areas (due to extreme weather events such as droughts, floods, forest fires or the shifting of climatic zones). On the other hand, land plays a major role in many climate protection scenarios by reducing emissions from land use and land use change, protecting carbon stocks in soils and ecosystems, and conserving and expanding natural carbon sinks. Also, the capture and storage of CO 2 through carbon dioxide removal technologies plays an increasing role for reaching the Paris climate goals (IPCC 2018 ). The induced increase in the demand for the different services from land inevitably implies trade-offs. However, neither the trade-offs nor the potentials for synergic uses are, as of now, comprehensively understood from an economic point of view and thus pose a challenge for future research. While there is a growing literature on negative emission technologies, their costs, potentials and side effects (Fuss et al. 2019 and references within) as well as on the interaction between climate goals and other SGDs on the global level (von Stechow et al. 2016 ), many research questions still remain to be addressed (Minx et al. 2018 ). This concerns especially a better understanding of opportunity costs, governance requirements, regional and distributional effects as well as of acceptance and ethical considerations. With respect to land degradation and land use for food production, changing climate and weather conditions as well as regional population pressure may raise the rate of land degradation (Fezzi and Bateman 2015 ), hurting food security and calling for preservation policies (Brausmann and Bretschger 2018 ). The overuse of ecosystems like forests and water, which protect and complement land, can accelerate the risk of adverse shocks and thus lower soil fertility, which reveals the close link between the different research subjects. However, much of the agricultural research in this field is still quite distant from mainstream environmental economics which can harm research productivity substantially. It remains a challenge to integrate agricultural and environmental research better, for example by bringing together food production, population, and the environment into a macrodynamic framework (Lanz et al. 2017 ).
• Environmental migration Migration in times of climate change is an extraordinarily complex, multicausal and controversial challenge (Adger et al. 2014 ). Heatwaves, droughts, hurricanes, and rising sea levels are likely to motivate or even force a growing number of people to leave their homes moving to presumably safer places. Climate-related migration can take a variety of different forms (Warner 2011) from voluntary to involuntary, from short- to long-distance and from temporary to permanent. Migration decisions are usually based on different motives and personal circumstances (climatically, politically, economically, socially), leading to heterogeneous reactions to climate events and making it often problematic to identify and delineate climate-induced migration. Due to these and other methodological difficulties and the small number of studies so far, no globally reliable forecasts for climate induced migration exist (WBGU - German Advisory Council on Global Change 2018a , b ). At present, the forecasted magnitude of the phenomenon ranges from 25 million up to 1 billion people by 2050 (Ionesco et al. 2017 ). Much of this migration can be expected to take place within countries, for example, from rural to urban areas or from drylands to coastal zones (Henderson et al. 2014 ) with environmental migration being one possible adaptation and survivor strategy in the face of climate change (Millock 2015 ). Given the uncertainty in future migration projections, the challenge is to improve migration models (Cattaneo et al. 2019 ) which includes a better understanding and integration of the microfoundation of agents’ migration decisions. Migration, and especially mass-migration, can have a profound impact on the environment of the new as well as the old settlement location and on their economic structure. Labor and commodities markets will be affected the most, with challenges arising also for education and health systems, government budgets and public spending. By affecting public institutions and the skill-mix of the labor force, migration alters economic development both in the sending and in the receiving countries or regions. More research is needed on these impacts. The influx of environmental migrants to new settlement locations may also trigger hostile attitudes and lead to clashes and even armed conflicts. The migrants may be perceived as rivals for scarce resources (land, clean water) or jobs. The situation may be aggravated by lack of political stability and poor-quality political institutions. Dealing with these aspects gives rise to new challenges in environment and resource economics. Traditional analysis of economic costs and benefits of migration have to be complemented by behavioral economic and political economy analyses.
• Urbanization as a key for environmental development In the last 70 years, the urban population has increased fivefold with more than half of the world’s population living in cities today and forecasts projecting the share of urban population to rise to almost 70% in 2050 (UN - United Nations 2018 ). Cities are responsible for about 70% of the world energy use and global CO 2 -emissions (Seto et al. 2014 ) and ecological footprints are positively correlated to the degree of urbanization (WBGU - German Advisory Council on Global Change 2016 ). In 2014, about 880 million people were living in slums (UN - United Nations 2016 ) elucidating the problems to make urban development environmentally as well as economically and socially sustainable. The speed of urbanization is projected to be the fastest in low and middle income countries, especially in Africa and Asia (UN - United Nations 2018 ), leading to new challenges for the provision of infrastructure, housing, energy supply, transport and even health care. Climate change can be expected to not only foster urbanization trends (Henderson et al. 2017 ) but also increase the magnitude of urbanization-related challenges. Urban areas are often located close to the coast or rivers basins, making them susceptible to rising sea levels and impacts of extreme weather events. Risks can be expected to be higher for poor households due to settlement in less safe areas and poorer housing (Barata et al. 2011 ), potentially perpetuating existing inequalities. On the other hand, cities might offer more efficient adaptation potentials. To date the consequences of climate change for cities and urbanization are still to be determined in detail but depend heavily on factors like location, size and level of development as well as governance capacities. Making cities, their population and their infrastructure resilient to climate change will be decisive for future development. The main challenge here is to better connect the research fields of environmental and urban economics to understand the drivers and dynamic effects of climate change on urbanization and resulting economic development, on adaptation costs and benefits and on the role of institutions. Insights from regional, political and behavioral economics can help shape effective governance to enhance resilience of cities to climate change.
• Health and epidemiological environment Environmental degradation can have profound implications for human health. These implications lead to direct as well as indirect challenges for economic decision making, economic development and thus economic research. While many of these challenges might not be new per se, they can be severely exacerbated by, for example, climate change. Economic implications of long-term increases in vector-borne diseases and heat stress as well as pandemics like the COVID-19 and ozone formation still remain to be analyzed in depth, as do the costs and benefits of adaptation measures dedicated to mitigating these effects (Mendelsohn 2012 ). Climate change also affects human health indirectly through impacts on economic development, land use, and biodiversity - and vice versa. Failed emission reductions and bad environmental management especially impact developing countries negatively through direct effects on health but also through health effects of delayed poverty reduction (Fankhauser and Stern 2020 ). Exposure to diseases or epidemics can increase the risk of civil conflicts and violence (Cervellati et al. 2016 , 2018 ). While research has addressed effects of life-expectancy, diseases and premature mortality on long-run economic development (e.g. Ebenstein et al. 2015 ; Acemoglu and Johnson 2007 ), a thorough analysis of the climate-health-development nexus is still missing. Overall, most research carried out on the interaction between environment, climate and human health has focused on physical health and mortality. The effects of air pollution from the burning of fossil fuels or agriculture on premature deaths, cardiac conditions and respiratory diseases, for example, received not only renewed interest in the wake of recent scandals (see e.g. Alexander and Schwandt 2019 ) but have been an active field of research for a number of years (Schlenker and Walker 2016 ; Tschofen et al. 2019 ). Mental health implications like stress, anxiety or depression on the other hand have received much less attention although, for example, Chen et al. ( 2018 ) in a study on air pollution in China estimate these effects to be on a similar scale to costs arising from impacts on physical health. Also, Danzer and Danzer ( 2016 ) find substantial effects of a large energy-related disaster (the Chernobyl catastrophe) on subjective well-being and mental health. Economic research should take up the challenge and put more effort into the economic evaluation of mental health related effects of climate change and environmental degradation in general. Potential to analyze these and other health-related questions have risen substantially in the last years, method-wise as well as topical, with new large data sets becoming available. Big data from insurance companies, satellite imagery on pollution dispersion and effects of draughts, for example, can provide new insights into the dynamics between environmental changes and health. But digital technologies themselves also generate new research questions addressing, for example, risks, costs and benefits of these new technologies.
• Carbon exposure and green finance The impact of climate change and of climate policy on the financial system is a topic of increasing public concern. The transition to a low-carbon economy poses a lot of challenges not only from physical risks and damages but also from transition risks. These accrue in such different areas as climate-related policy making, altered market behavior, changes in international trade patterns, technology development, and consumer behavior. To support a safe and gradual transition to a low-carbon economy, the financial sector needs to evaluate and eventually address the new risks associated with climate change and decarbonization in an efficient manner. There is widespread concern that financial markets currently lack sufficient information about the carbon exposure of assets, resulting in risks from climate change and climate policy for investments (Karydas and Xepapadeas 2018 ). If not anticipated by the markets, climate shocks also cause asset stranding, i.e. unanticipated and premature capital write-offs, downward revaluations, and conversion of assets to liabilities (Rozenberg et al. 2020 ; Bretschger and Soretz 2018 ). The same holds true for climate policies which are not or cannot be correctly anticipated by investors (Dietz et al. 2016 ; Stolbova et al. 2018 ; Sen and von Schickfus 2020 ). The growing awareness of these risks is reflected in the attention that policy makers have devoted to the development of transparency improving information systems and indicators in recent years. However, challenges related the design of these systems and indicators, e.g. with respect to an accurate and encompassing risk assessment, still remain. The importance of addressing these challenges is excerbated by prevalent network effects and counterparty risks that transmit climate-induced financial shocks from individual firms to the broad public holding their capital in stocks of fossil-fuel-related firms, investment funds, and pension funds, which all could suffer from stranded assets (Battiston et al. 2017 ). Divestment campaigns, shareholder engagement, and mandatory disclosure of climate-relevant financial information by companies and investors warrant further theoretical and empirical analysis. Also, a better understanding of the economics behind financing instruments like green bonds is only recently emerging (Agliardi and Agliardi 2019 ). Despite some early studies there is a knowledge gap with respect to the extent of climate and policy risks for central banks and regarding the potential significance of different channels connecting the risks in the real economy with monetary policy. Given the environmental and international policy perspective of the climate problem, the specific contribution of the financial sector and the central banks in the architecture of global climate policy has to be subject to further investigation.
• Energy system transformation The transition from a fossil-based to a green economy is needed to combat climate change but requires a thorough transformation of energy systems (Pommeret and Schubert 2019 ) in developed as well as in developing countries. In industrialized countries, challenges arise from the structural transformation of highly complex energy systems and their linkage with other economic sectors. While one hundred years ago, it was the rapid dissemination of fossil-based industrial processes, transportation, and heating that resulted in wide-spread sectoral change, similar adjustments can be expected with the increasing importance of electricity for decarbonization. However, changing the use of energy technologies in practice involves decisions on different levels and constitutes a highly nonlinear process. Future power generation in many countries will increasingly rely on renewable energies like wind and solar energy. To offset intermittent power generation, more and better storage capacities of batteries or pumped hydropower will be needed (Ambec and Crampes 2019 ). Synthetic fuels, heat pumps, fuel cells and e-mobility will increasingly use electricity to replace fossil fuels not only in the power sector but also in traffic and heat generation. While the adoption of renewable technologies like wind and solar was often much faster than predicted in the past, the critical mass of market penetration has still to be reached in other areas to benefit from potential scale effects and cost decreases. Shape and speed of the energy transition are, however, highly dependent on a political process which is hard to predict for market participants. Policy and ecological risks, together with the long-run character of the energy and related infrastructure investments, pose a big challenge for research and practice. In this context, it is especially the economic potential of green hydrogen and/or synthetic fuels that is controversially discussed at present. As production costs are expected to fall (Glenk and Reichelstein 2019 ), interest in hydrogen is increasing sharply (IEA 2019 ) and new research questions arise. For developing countries, clean and decentralized renewable energy technologies offer big potentials for electrification and economic development. However, despite the potential for decarbonization and the reduction of other externalities and health hazards and despite the fact that more than 90% of the annual increase in power generation comes from emerging economies, research on the development and adoption of clean energy technologies still focuses mainly on the developed world. More research on the barriers and challenges for adoption in developing countries is needed, including sustainable financing, institutional framing and the design of regionally tailored policies.
• Sustainability perspective on digitalization Digitalization and artificial intelligence are often seen as opportunities for enhancing the efficiency of energy and resource use. They offer new opportunities for circular economy, agriculture, monitoring of ecosystems and biodiversity, sustainable finance and decarbonization (see WBGU 2019 and literature within). However, they may also accelerate energy and resource use, increase inequality between regions and income groups and endanger sustainable development. Digitalization offers new access to markets, impacts market forms and shapes consumer behavior all of which can have extensive implications for the ecological, social and economic dimensions of sustainable development. Digitalization is a cross-cutting theme that reaches across spatial scales (from regional development to globalization) as well as temporal scales (from short-run impacts on energy systems to long-run adaptation to climate change). So far, the potentials and challenges for sustainable development that are associated with digital technologies have mostly been addressed outside of environmental and resource economics. The focus has been on topics such as data security and privacy or, for example, on the implications of the ”fourth industrial revolution” on employment and labor markets. Costs and benefits of digitization, the design and effectiveness of policies in industrialized as well as developing countries have garnered much less attention in the context of environmental, resource, energy and climate economics. Also, impacts of digitization on the behavior of economic agents resulting in, for example, rebound effects or changes in consumption patterns and environmental awareness, have not been addressed comprehensively (Gossar 2015 ). In all of these areas, our limited knowledge base creates opportunities and challenges for future research in the field. But, digitalization not only creates new research questions, it also provides new means to answer them. It has led to new developments in data science, big data analysis, machine learning and artificial intelligence that allow new insights into, for example, material flows, emission patterns and technology diffusion as well as the optimal design, implementation and effectiveness of regulation (Fowlie et al. 2019 ; Weersink et al. 2018 ; Graziano and Gillingham 2015 ).
• Quantitative analysis of environmental use Recently, there has been a significant shift in the empirical methods used in economics from traditional regression analysis to random assignment and quasi-experiments. Arguably this can improve the capturing of causal relationships and reduce the biases of traditional study designs. In environmental economics, experimental and quasi-experimental approaches have been applied mainly for capturing individuals’ or firms’ decisions on the use of land, water, resources, and energy (e.g. Allcott 2011 ; Duflo et al. 2013 ; Deschenes et al. 2017 ). Wider applications of these rigorous methods in environmental economics and well-suited empirical designs are desirable but certainly challenging e.g. when assessing aggregate environmental costs from climate change or biodiversity loss. An important but underrated field in applied environmental economics is the ex-post empirical assessment of environmental policies. The challenge is not only to identify environmental externalities, causalities, and impact intensities but also to provide an accurate valuation of the cost of policies, because they vary widely especially in environmental economics. The traditional empirical methods remain to be important and are not simply replaced. The same holds true for empirical designs in a time, cross-country, or panel structure. The increasing availability of large or very large datasets with observations varying widely across time and space offers a different set of options to provide evidence on the impact of environmental damages or policies to abate them (e.g. Currie and Walker 2011 ; Martin et al. 2014 ; Zhang et al. 2018 ). Fast-growing computational power and machine learning provide even more avenues for fruitful applications in environmental economics (see e.g. Abrell et al. 2019 ) but the challenge to use computer power wisely and to derive results which are sufficiently robust remains demanding .
• Structural assessment modelling and modelling transparency In an effort to better understand the ramifications of political decisions and technological developments on climate change, energy supply and resource extraction (to name but a few examples), increasingly sophisticated numerical models have been developed in recent decades. It is evident that quantitative economics analysis is important for policy advice. Yet despite their complexity, these models usually still adopt some very simplifying and sometimes ad-hoc assumptions. In particular assumptions used in integrated valuation models have come under heavy criticism in recent years (Stern 2013 ; Pindyck 2013 ). Simplifications concern market structures and market failures, the integration of risk and uncertainty as well as societal, institutional and cultural detail. Also, manifestations of climate change and damages come at very different regional and temporal scales, making a truly integrated assessment of the climate-ecosystem-economy nexus next to impossible. We see it as a major challenge for future research to provide more accurate foundations for integrated assessment models. While simplifications are needed to reduce computational complexity, they raise the question to which extent the results obtained render reliable insights into future developments. Asking for models that are detailed in every dimension and can answer every question resembles of course the search for the holy grail. However, the need for a better understanding of the model dynamics has already led to the development of a new generation of models which have a stronger foundation in theory (Golosov et al. 2014 , Bretschger and Karydas 2019 ). A better understanding of the limits of models and of the questions specific models can and cannot address is still needed as well as transparency in model development. More applied studies, assessments of global environmental trends under different economic assumptions often use ”scenarios” to describe future trajectories. The scenarios are mostly based on expert opinion and do not rely on estimates about the likelihood that such a trajectory will occur. It is also critical that the economics behind the scenarios is often neglected. Prominently, per capita income can be projected using endogenous growth theory, while population development can be evaluated using state-of-the-art theories on fertility and morbidity.

Conclusions

This article set out to highlight a number of challenges that are highly relevant for future research in the field of environmental and resource economics. The focus was mainly, although not exclusively, on topical issues. We only briefly touched upon on some methodological advancements that might have the power to further parts of our field. Big data, machine learning and artificial intelligence hold high promise in this regard but their limits and potentials for environment, climate and resource economics have yet to be fully understood.

It should have become clear, that a number of the challenges presented can only be addressed adequately by interdisciplinary research teams with relevant disciplines ranging from climate science, (computer) engineering, sociology, virology to soil sciences. In many cases, economists’ analysis and the derivation of sound policy recommendations require the knowledge available in these fields. However, such research cooperations are by no means one-way streets: Other disciplines need the input of economists in order to assess future development scenarios and implementability of solutions. The knowledge and data required for economics analysis does not always exist yet, but interdisciplinary cooperation can help to identify and close these gaps. Overall, the less economists have already worked on specific challenges, the harder it is to assess best research strategies and the potential for success. Take the digitization-sustainable-development-nexus as an example: best research strategies and success are extremely difficult to predict as not only is the related economics research still in its infancy but also the field itself is extremely dynamic.

As already pointed out in the beginning: We are aware that our selection is bound to create discontent and disagreement. Having said this, it should also be stated that we expect some of our challenges to be more or less universally agreed upon. This holds especially for the broader topics: for example, how to accomplish deep decarbonization; how to deal with risk and uncertainty; or how to assess the role of disruptive development. One reason for this lies in the encompassing nature of these topics. They are relevant for many of the other fields that we have pointed out: For behavioral analyses, the capacity to deal with disruptive change in the face of risk and uncertainty are essential. Loss of biodiversity and natural capital, land degradation, conflicts over resources and migration are exacerbated by climate change. The potential of digitization for sustainable development constitutes disruptive change in itself. Yet, all of these fields are not merely subfields of the more overarching themes, they raise important research questions in their own right.

Nevertheless, it is to be expected that it will be the more specific fields over which disagreement will arise: Are ‘land use and soil degradation’ more important than ‘fisheries’? Is the ‘institutional analysis of environmental policies’ of higher relevance than the ‘development of alternative welfare concepts’ (to pick out some random examples). Of course, there are more fields that could have been included and also, of course, there is no objective criterion for the inclusion or exclusion of fields. The selection of the challenges is based on the analysis and criteria presented in the first section but it is ultimately ours; we are happy if this paper contributes to a lively and constructive discussion about the future of our field.

Open access funding provided by Swiss Federal Institute of Technology Zurich.

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Contributor Information

Lucas Bretschger, Email: hc.zhte@reghcsterbl .

Karen Pittel, Email: ed.ofi@lettip .

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